As India's wealthy population expands, they seek answers regarding their newly made fortunes- How does a family best safeguard and protect its assets? What investment opportunities are out there? Who will assist in overseeing investments, philanthropic activities, taxation, accounting, as well as legal and operational affairs? With these concerns in mind, there has been a recent emergence of Indian families establishing family offices.
Additionally, diversification is key, as it's never wise to keep all one's eggs in one basket. And Indian family offices are the perfect instance of it. As their private market portfolios are made up of direct startup investments (47%), exposure to VC/PE (Venture Capital/Private Equity) funds (32%), and exposure to venture debt funds (11%), as per Lets Venture. Notably, over the last five years, family offices have almost doubled their private market allocation to 40% (EY). However, the management of wealth and assets in today's constantly evolving business landscape is no longer a straightforward and predictable journey.
To address the same, the Family Office Summit will help you gain exclusive insights on the changing family office landscape, various investment opportunities, diversifying investment portfolios, and proactive stance towards risk management in order to safeguard family assets and ensure long-term stability.
It is estimated that there are approximately 257 family offices in India that have invested in a total of 659 deals, with a significant investment amount of $1.33 billion to date according to Edge Insights. A noticeable trend has emerged whereby family offices actively seek to engage in direct private investments within the market. This movement has been largely driven by 1. A desire for greater investment control 2. Attractive risk-adjusted returns with limited correlation to the public market 3. Decreased price volatility.
What potential do alternatives to conventional investment paths show in terms of high returns as family offices seek them out? What does this say about the new investment landscape in India?
Indian family offices invest in various asset classes such as bonds, public equities, real estate, and hedge funds. However, tracking the performance of these investments and managing the necessary technology can be challenging for them. Additionally, their prime concerns in the current market include the complexity of investments, regulatory compliance, market volatility and more which require a significant investment of time, resources, and expertise. How will family offices rise above these challenges?
Over 70% of surveyed family offices anticipate the next generation prioritizing decentralized finance, ESG, and responsible investments, even if it means sacrificing some profits for social causes. Additionally, 45% perceive the next generation of family office leaders as harder to engage due to their greater focus on personal and career pursuits. Thus, conflict of thinking requires a common ground. How can wealthy families ensure a smooth transition of leadership by gradually relinquishing their responsibilities and preparing their successors for their future roles?
Establishing and operating family offices entails a complex interplay of legal, tax, and regulatory intricacies. Within this realm, several crucial focal points come to the fore. Legal considerations like determining the optimal legal structure for the family office, appropriate legal jurisdiction, ownership and control arrangements, and more. On the tax front, evaluating potential tax implications and designing a tax-efficient structure is necessary. Now, the question arises: How can family offices ensure compliance, mitigate risks, and optimize their operations and objectives while aligning with these complexities?
During the pandemic-induced economic shutdown in 2020, family offices encountered unforeseen risks amidst a severe recession that set multiple negative records. However, these risks also presented opportunities to enhance internal control and connectivity, that can be positively correlated with family offices' complexity. And that resulted in a consequential conclusion: While certain family offices viewed the slowly unfolding global economic downturn with dread and pessimism, others demonstrated remarkable resilience due to their leadership's focus on interpersonal skills for sustaining company morale and cultivating relationships.
What are some valuable leadership lessons that can be learned from studying family businesses, and how can these lessons be applied to other types of organizations?
The expansion of family offices in India is an emerging trend worth monitoring. Given the considerable accumulation of new wealth, the formation of these privately run entities will persist, and they will require assistance to operate efficiently. Although family offices can manage some operations in-house, they will depend on outsourced specialists, including accounting, tax and estate management, legal advice, investment management (OCIOs), etc. With effective planning, single and multi-family offices in the country will flourish. What does the future hold for them?
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