What is a ‘Family Office’?
A
Family Office or a Single Family Office (SFO) is a professional platform
dedicated to investing financials of high and ultra high net worth individuals,
with the objective to manage and protect the wealth of a family through private
wealth management advisory outfits.
A Family Office
allows the family to pursue its own customized wealth management approach and
guarantees the highest degree of confidentiality, thereby giving such
individuals greater control over their finances.
A Family Office
provides solution for building, preserving and transferring family wealth and
legacy. The concept of Family Office is limited to high and ultra high net
worth individuals, as they have higher risk-taking capabilities.
Another common
concept is Multi-Family Offices (MFO) which provides a variety of financial and non financial services including tax and estate planning, risk management, objective
financial counsel, trusteeship, lifestyle management. As the customized services offered
by a multi-family office can be costly, clients of a of a Multi Family Office have a net worth exceeding that of 50 million.
Family
Office- A foreign concept?
The concept of
having a Family Office is fairly common to UK, the US and Europe. The early
Family Offices can be traced to Europe, created in the early 19th century by
wealthy merchants along the eastern coast of the United States and more
famously by the Rockefeller family. Faced with the increasingly intensive
process of wealth management, advisors were hired with the time and expertise
to protect family interests.
Indians too have started to inculcate the idea of establishing a Family Office as can be
seen from Azim Premji's ‘PremjiInvest’,
Ajit Khimji's ‘Khimji Family Office’,
N R Narayana Murthy's ‘Catamaran Ventures’
and the Ambani Family.
However orthodox
family businesses prefer to have a 'sethji' do a lot
of backseat driving even if they hire professionals to manage their wealth.
Family Office vs. Banks
Several bankers
often do approach high and ultra high net individuals but are unable to give a
consolidated portfolio allocation. Advisors generally only talk about the
products marketed by their institutions, and fail to understand the nuanced
needs of a family business, as a result the financial advice doled out often
does not suit the requirements of the family and is not productive in the long
run.
Practical Scenario
·
The
country is home to 90 mammoth SFOs that manage private wealth in excess of $100
billion, according to an internal study conducted by Association of
International Wealth Management of India (AIWMI).
·
Ashni
Biyani, daughter of Future Group chief Kishore Biyani, is one next-gen scion
who is setting up a family office to manage the family's personal wealth,
amongst other objectives.
· Ramesh
Chauhan, owner of the Bisleri brand, is a rare first-generation promoter who
has sought professional advice to manage his wealth — he has outsourced the
task to DSP Merrill Lynch.
· Capital
pools such as Narayan Murthy's Catamaran
Ventures is learnt to have (direct and indirect) investments in over 100
start-up ventures.
·
Azim
Premji's Premji Invest has money parked in Flipkart, Myntra and Snapdeal.
·
Ajay
Piramal's SFO is ploughing in as much as $50 million into Montane Venture, an
early-stage fund, as its anchor investor.
· Burman
Family Holdings, the proprietary investment arm of the promoters of the Rs
53,000 crore retail conglomerate Dabur India, was said to be stitching together
a syndicate that will identify and make growth stage investments across
sectors.
Thanks for the useful article. Very nice.
ReplyDeleteAssets under management
Mazagon Dock Shipbuilder Ltd.
IPO market
IndiaMart Intermesh Limited
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ReplyDeleteAt New Edge Wealth, we specialize in providing tailored wealth management strategies, investment solutions, and financial planning services designed to secure a prosperous future. The team at New Edge Wealth combines innovative tools with industry expertise to deliver insightful guidance and unparalleled support.
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