Family Offices in India

Background on Family Offices

Family Offices are setup with the primary objective of “PIP” – “Preserve”, “Increase” and “Pass” on the family fortunes to the next generation. Family Offices are the personal wealth management firms of the ultra-rich. Family Office (FO) undertakes multitude of activities like Investment Planning, Portfolio management, Estate Planning & Administration, Philanthropic Planning, Income Tax Planning etc.

Background on India

India is emerging as a potential global leader and is projected to be the world’s fifth largest economy by GDP in 2019, valuing at $2.95 trillion surpassing both UK and France. India’s GDP is estimated to the world’s third largest by 2030 worth $10 trillion. India is poised to be most compelling story of the decade with a highly favorable demographic dividend, growing consumer market and access to mobile internet.

India ranks 77 among 190 economies in the Ease of Doing Business, according to the latest World Bank report. The rank of India has seen significant improvement from 100 in 2017 to 77 in 2018. In addition, India ranks 58th out of 140 economies in the Global Competitiveness Index 4.0 released by World economic forum. As per the report, India is the most improved G20 economy, with a gain of 1.2 points and five places from the 2017 index.

Source: Haver Analytics and IMF Staff Calculations

India is now ranked sixth in the wealthiest countries with a total wealth of USD 8,230 billion. India’s millionaires have doubled in the last 1o years and it is expected that the country will have 950,000 millionaires by 2027 according to New World Wealth. Report further noted that India, is home to 330,400 HNWIs (high net-worth individuals) ranking ninth across globe.

Source: Cap-Gemini Asia – Pacific Wealth Report

India is now an attractive location for firms and investment funds looking to establish their business due to its proximal location to Singapore, Tokyo, Dubai, and Shanghai. Access to emerging markets and the ease of doing business in India is making India an attractive place to live and do business. Great deal of wealth that was generated in the last decade and investments to the country has in turn, led to wealth management solution: Family Offices

Family Offices in India

Family Office concept, introduced by Rockefeller Family in the US in the 19th century, and has been exclusively available to the wealthy families in Europe and United States is quickly finding its place among India and Asia. Though the number is unclear, there are around 100 Single Family Offices (SFOs) in India and a dozen more Multi Family Offices (MFO). The number is only expected to increase in the coming years.

The number of Family Offices in India is growing; however, many high net worth individuals and wealthy families have relied on players that provide family office services (asset managers, independent advisors) than a single-family office model. But the trends indicate increasing appetite among Indian HNWI’s to embrace the more traditional family office model.

Investment strategy of the HNWI’s and UHNWI’s has seen a dramatic shift over the last few years. While the Family offices tend to invest in equity and debt which is still major part of the portfolio, they are diversifying themselves to investing in Alternative asset classes – Private Equity, Hedge Fund, Venture Capital to name a few. There is growing interest to invest in Distressed Assets, Pre- IPO funds as well. Startup Investing is seen as a lucrative asset class among Family offices these days.

In my discussion with Fund managers and Fund of Fund managers based out of India on investing and managing wealth in India, some of the advantages that were listed are – “Infrastructure, Education, Changing Regulatory paradigm, technology disruption that is seen among various sectors, and ancillary services to investment firms to name a few”. This reflects a growing consensus among fund managers that India is a great location for investing and wealth management opportunities here are only growing.

Over the last few months, I spoke with HNWI’s in India who are looking to diversify their asset classes and looking to partner with Individuals or companies who share the same vision and mission in direct investment opportunities, club deals or joint ventures. In addition, I interacted with various Single and Multi-Family offices across the globe understanding their Investment thesis who are looking at India as an investment destination in the next couple of months.

For years, investors in India and generally in Asia have been under served and overlooked in favor of investors more local to US and European funds. However, the trend is reversing as private equity firms and venture capital firms realize the potential in India.

For international investors looking for a foothold in India and access point to wealthy investors and opportunities, you need look no further than India. If you would like to discuss Indian Family Office market place or looking to invest in promising Fund managers in India, please email me at [email protected]