When the entrepreneurial goals of a mega rich family or a seasoned entrepreneur are done and dusted, they are left with ample time and resources to venture into new businesses. When we say ‘mega rich family’, picture the likes of Ambani, Tata, Birla, and other empires. Also picture well-known uber-rich celebrities, and NRI businessmen wanting to set foot in the Indian start-up and business ecosystem. To realise their vision of being on par with new-age businesses, family offices are set up to fund companies in sectors like technology, neo banking, etc.
What is a family office?
A family office is a personal investment office/vehicle which is operated by billionaires or mega HNIs (High Net-Worth Individuals). These individuals usually pump their personal fortunes into promising new companies that may be start-ups, VCs or PE funds that demonstrate growth capabilities. They in turn give rise to more billionaires through their high valued funding sprees. Family offices thrive in ecosystems with growing investment opportunities. They are traditional business families that play the role of a Venture Capitalist or Private Equity fund. But unlike VCs, family offices attach their portfolios to traditional assets like stocks, real estate, or gold. A family office utilises private wealth of business leaders, celebrities, NRIS, multi-generational entrepreneurs for investing in other businesses. They are wealth management services aimed at preserving and growing the money of the rich.
150+ family offices launched last decade
In just the past decade more than 150 family offices have sprung up. What’s interesting is that the very same start-ups that received family office investments have risen to the unicorn status in the past decade. This is testimony to India’s growing billionaire club.
Prominent family offices in India
A lot of celebrities also own family offices like Yuvraj Singh’s YouWeCan ventures. NRIs have family offices based out of India like Abhinav Jhunjhunwala’s AJ Capital in Singapore, Satveer Singh Thakral’s SGAN, Satpal Khattar’s Khattar Family Holdings, and S Ramakrishnan’s Transworld Group Family Office based in UAE. Among family offices with mature portfolios in India, noteworthy are Mohandas Pai’s Aarin Inspired Capital, Salisbury Investments by Aditya Puri, Former MD and CEO of HDFC Bank, Ratan Tata’s RNT Associates, NR Narayana Murthy’s Catamaran Ventures, Burman Family Holdings, Harsh Mariwala’s Sharrp Ventures, PremjiInvest by Wipro’s Azim Premji, Damani Group’s Artha India Ventures, Rana Kapoor’s The Three Sisters (run by Kapoor’s three daughters – Radha, Raakhe and Roshini), Ronnie Screwvala’s Unilazer Ventures, and Pratithi Family Office by Kris Gopalakrishna, co-founder of Infosys.
Associating with marquee brands
The prominent family offices have been quick to associate themselves with marquee brands the likes of which include Flipkart, Snapdeal, OYO Rooms, Ola, and Udemy. All these brands are technology companies which goes to show that Family Offices are swiftly progressing in the technology direction. The Three Sisters Family Office had associated with the brand ‘Businessworld’ back in 2014 including all its marquee events and conferences.
A family office is a personal investment office/vehicle which is operated by billionaires or mega HNIs (High Net-Worth Individuals).
What’s in it for me?
For ultra-high net worth individuals (UHNIs), venture capital has emerged as a means of generating superior financial returns. The fact that the returns keep coming even during a pandemic or a similar crisis has been revelatory for family offices in India. Currently, the VC and PE asset makes up for 20% of their portfolio allocation while contributing to 30% of their portfolio returns.
Technology investments have emerged as a profitable investment for wealthy families. However, they find it difficult to gain exposure to these high growth portfolios. As such, family offices rely on professional Venture Capitalists to get the opportunity.
As new billionaires are emerging with each passing year, the number of Family Offices that cater to them is also growing rapidly. The total wealth held by Indian HNIs is growing and is set to touch $700 B in the year 2024.