Family Office- Indian Scenario

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.

Delhi-based Campus Activewear Pvt. Ltd has raised an undisclosed amount in funding from TPG Growth, the growth equity and mid-market buyout fund of private equity firm TPG Capital Inc, and QRG Enterprises Ltd, the family office of the promoters of Havells Group.