Perspectives from ISB

Family office principals interviewed by Campden Wealth researchers for the new Private Equity and Co-Investing for Family Offices report, out today, said restricted access to high quality deals, limited team resources, and knowledge gaps were obstacles on direct investments.

However, higher expected returns, absence of agent fees, and greater sense of control over operations and exit were attractions which prompted families to invest directly.

Interviewees highlighted the importance of thorough due diligence and a team’s ability to grow the businesses that they intend to invest in as the key success factors.

Family office executives pointed to the benefits of diversification and consistent deal flow as additional factors which attracted families to funds.

Family offices are expected to bolster their already sizable investment in private equity in the coming years, the report added. On average, private equity made up 21% of a family office portfolio – the highest proportion of any asset class. Eight in 10 family offices intended to maintain or increase their allocations to this asset class going forward.

Asked what message family offices should take from the report, Zuzanna Sojka, research manager at Campden Wealth, said the main factor which attracted family offices to private equity was the potential of higher returns.

Campden Wealth, with support from US multinational private equity firm KKR, published Private Equity and Co-Investing for Family Offices today. The report built on quantitative data collected for Campden Wealth’s Global Family Office Report 2016 (GFO).

Based on data collected for the GFO 2016, allocations to private equity represented over a fifth (21%) of the average family office portfolio. A 2% increase from 2015 was reported among multi-year participants in the study (family offices who participated in the GFO in 2015 and 2016).

Family office executives who participated in qualitative interviews earlier this year, pointed to diversification benefits and the potential of higher returns as the key factors that attract them to private equity.

Source: Beech, James., 1 June, 2017;