個案總覽

The application of technology in the area of finance has fostered a slew of innovative financial technology ("fin-tech") based firms. Wealth management and personal financial advisory is one of the industry segments that is witnessing a technology-led transformation across the globe with the advent of a wave of robo-advisors. The case presents an overview of the financial planning and advisory (FP&A) segment in the country prior to the onset of robo-advisors and the impact of robo-advisors on the industry dynamics. It traces the journey of Arthayantra ("the Company"), a leading Indian robo-advisory firm, as it seeks to change the way personal finance is perceived and delivered. It showcases the evolution of Arthayantra in its initial years as it develops its value proposition, puts in place its organizational structure and establishes a customer base in the backdrop of a changing macroeconomic environment. The case closes at a point where Arthayantra is evaluating a strategic pivot from a sole advisory model to an advisory-cum-execution model, encouraging students to analyze the strategic choices that lay before the firm.

The case analyses an opportunity of risk arbitrage associated with stock buy-backs (repurchases) available to retail shareholders in India. The opportunity arises from a differential treatment of small (retail) and large shareholders by Indian stock buy-back regulations. There has been strong anecdotal evidence of individuals taking advantage of this opportunity to make significant returns. The case illustrates the mechanics of the transaction, explores various sources of risks that differentiate it from a pure arbitrage play and the impact of these risks on the profitability of the transaction. The case also analyses the systemic checks that prevent arbitrageurs from making large abnormal profits using this opportunity. Finally, the case touches upon the motivation underlying this regulation and the regulatory considerations involved in remedying the risk arbitrage opportunity.