Asian family offices seek greater PE funds exposure - survey

Of the 72 participating family offices that originate from the region, 57% said they wanted to ramp up fund commitments, while 50% expressed a desire to invest more in venture capital and 39% would like to do more direct private equity deals. This compares to 47%, 40%, and 41% on the same topics among family offices globally.

Across 17 asset classes, Asian family offices are more open to increasing exposure rather than holding steady in just five: private equity funds, venture capital, direct real estate investments, developed market equities, and developing market equities. Cash and special purpose acquisition companies (SPACs) are the only asset classes where sellers outnumber buyers.

The average Asian family office portfolio is 16% bonds, 32% equities, 10% direct private equity investments, 7% private equity fund investments, 6% venture capital, 3% private debt, 11% real estate, 7% other alternatives, and 7% cash. Allocations to SPACs and crypto are negligible.

In 2021, private equity funds, direct private equity, and venture capital were the best-performing asset classes, returning 15%, 13%, and 15%, respectively. The weighted average return was 10%.

The private equity portfolio split in 2021 was 44% funds, 8% fund-of-funds, and 47% direct. Within directs, the family office took an active management role for 26% of assets. Half of respondents said directly held, actively managed assets outperformed expectations, compared to 17% for funds, 0% for fund-of-funds, and 8% for passive direct investments.

Growth equity and venture capital are the most popular private equity asset classes among Asian family offices. Two-thirds of respondents have exposure to growth funds, while approximately half are in venture funds and venture and growth direct investments.

On average, family offices have the capacity to work on eight deals in parallel. More than two-thirds of direct investments comprise minority stakes in companies or co-investments with GPs. A family office’s own networks and those of industry peers are the most active sourcing channels, followed by advisor networks and friends and family.

Seven in 10 respondents said their main investment objective is wealth preservation or balanced return as opposed to pursuing growth. Asked to identify the biggest risk to financial markets, 88% pointed to inflation, followed by rising interest rates and geopolitical risk. Increasing real estate and equities exposure are the most popular inflation hedges.

“Family offices have started to hedge against inflation, with slightly over half looking for investment opportunities for diversification, and a growing number interested in increasing their allocation in direct investments in private equity,” said Chi-man Kwan, CEO and co-founder of Raffles Family Office, a Hong Kong-headquartered multi-family office, in a statement.

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• Topics
• LPs
• Fundraising
• Performance
• Asia
• Family office
• Direct investment
• Co-investment