The global landscape of family offices has undergone a dramatic transformation since 2019, experiencing a threefold increase and sparking fervent competition among private equity firms, hedge funds, and venture capital entities to attract their investments.
In a recent study conducted by Preqin, it was revealed that the number of family offices, that represent the private investment entities of affluent families, exceeded 4,500 worldwide last year. North America claimed the lion’s share of family offices, boasting 1,682 establishments.
Furthermore, over half of all family office assets worldwide are concentrated in North America. Analysts estimate that family offices now oversee a staggering $6 trillion or more in assets, with their numbers continuing to rise.
With over 2,600 billionaires worldwide, nearly all of whom engage the services of a family office, and an excess of 90,000 individuals possessing assets worth $100 million or more—the typical threshold for engaging a family office—there exists ample opportunity for expansion.
This surge in family offices has not gone unnoticed by private equity firms and other alternative investment managers, who are actively seeking to secure funding. Giants in the industry such as Blackstone, KKR, and Carlyle have expanded their teams, invested in events, and developed tailored products aimed specifically at family offices.
Rachel Dabora, a research insights analyst at Preqin, notes, “The larger private equity managers are trying to compete thereby putting in resources and time. Ultra-high-net-worth investors and family offices are really on their radar.”
At first glance, family offices present an ideal clientele for alternative investment firms. Traditionally focused on wealth preservation through conventional stocks and bonds, family offices now exhibit characteristics akin to institutional investors, pursuing higher long-term returns through investments in private equity, venture capital, hedge funds, infrastructure, and real estate.
Notably, family offices boast the highest allocation to hedge funds of any type of institutional investor, according to Preqin.
Despite challenges faced by private equity, venture capital, and numerous hedge funds in recent years, optimism remains high within the family office sector.
While more than half of the family offices surveyed by Preqin expressed disappointment with their venture capital returns and a third with private equity, the majority remain hopeful for improved performance in the coming year and beyond.
Private equity firms are aggressively targeting the family office market. Blackstone, a stalwart in serving wealthy individuals through its Private Wealth Solutions business, is bolstering its Private Capital Group, which caters to family offices, billionaires, and the most sophisticated individual investors.
Craig Russell, global head of Blackstone’s Private Capital Group, affirms, “We view this as a substantial and growing opportunity for Blackstone.”
