#长文创作激励计划#
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Divided by asset management scale
Family offices with assets of $500 million or more are slightly more likely to hold concentrated positions (68%), while family offices with assets below the $500 million threshold are slightly less likely to hold concentrated positions (62%). Larger family offices are more than twice as likely to have a concentrated exposure to listed companies than their smaller counterparts (42% vs. 19%, respectively). One possible reason is that, given the greater absolute value of family wealth, larger family offices may prefer to hold a larger share of assets in a concentrated manner.
By region
Interestingly, EMEA and APAC have a more diversified asset allocation, with about 45% of family offices not holding a concentrated position in listed or unlisted companies. In North America and Latin America, only 26% of their peers do not have such concentrated holdings.
Leverage level
Global Overview
Unlike institutional investors, such as hedge funds, three-quarters of family offices say they use no leverage (48%) or very little (25%).
Divided by asset management scale
Family offices with more than $500 million in assets under management are more likely not to use leverage than those with assets under $500 million (51% vs. 45%, respectively). All other things being equal, it is generally assumed that the risk appetite of the former should be greater than that of the latter, and therefore more likely to use leverage. Among the respondents who use leverage, there is no correspondence between the size of the family office and the scale of leverage.
By region
Compared to family offices in other regions, family offices in Latin America use less leverage, and those that use leverage have less leverage than in other regions.
Proportion of portfolio assets managed internally versus externally managed
Global Overview
Globally, the average proportion of investment assets under management in a family office is 61%. Family offices with assets under management of less than US$500 million (63%) and family offices with assets under management of more than US$500 million (60%) have a similar share of investment assets under internal management.
By region
From the perspective of regional distribution, there are large differences between regions, with North America having the lowest proportion of investment assets under management (52%) and the highest proportion in Asia Pacific (72%).
Family offices continue to favor private equity, but fewer family offices plan to add as many as last year Growth equity and venture capital are the most popular fund categories More than three-quarters of respondents have made direct investments Start-ups and growth companies are the most popular direct investorsFamily offices remain keen on private equity. However, compared to the figures since 2022 and 2021 (63% and 52%, respectively), the proportion of family offices (38%) that intend to increase their private equity allocation has declined significantly. In the case of direct investment, the motivations vary. Sixty-six per cent of family offices sought speculative deals on undervalued assets, and 38 per cent suspended new deals due to economic uncertainty.
Private Equity Fund Allocation – by Type
Global Overview
Investments in private equity funds are primarily concentrated in growth equity (30%), venture capital (27%) and acquisitions (19%). Many family office clients have expressed interest in secondary market transactions during the conversation, but this interest has yet to translate into actual investment (6%).
Divided by asset management scale
The proportion of private equity subcategories is roughly similar between family offices with assets under management of more than US$500 million and family offices with assets under management of less than US$500 million. Specifically, the latter is more heavily biased towards venture capital funds (32% and 22%, respectively), mixed investments (8% and 1%, respectively) and fund of funds (11% and 7%, respectively). In contrast, 35% of private equity investments are allocated to growth equity funds by larger family offices, compared to 25% of smaller family offices.
By region
From a regional perspective, there are many similarities in the allocation of various types of private equity fund investments. In Latin America, the proportion of venture capital in family offices is significantly lower than in other regions (only 18% vs. 30% on average in the other three regions), but the proportion of fund of funds allocation is significantly higher than in other regions (up to 16% vs. 7% in the other three regions).
Direct investment participation
Global Overview
Direct investment remains a top priority for family offices around the world. Globally, four-fifths of family offices say they have made direct investments. There is little difference between family offices with assets under management (AUM) of more than and less than US$500 million.
By region
North America (86%) and EMEA (87%) have the highest share of direct investment from family offices, compared to 69% in APAC.
Adjustment of direct investment strategy
Global Overview
While enthusiasm for direct investment remains high, family offices may be coming to a crossroads. Two-thirds of respondents intend to look for speculative deals with low valuations or attractive terms. In contrast, 38% of respondents have paused new investments due to economic uncertainty, although no respondents said they would use this as a reason to seek to exit investee companies.
An important message from the Family Office Leadership 2023 campaign is that private equity valuations are likely to continue to decline in the near term. The exact amount of decline will not be known until the company in need of further financing launches a new round of financing. Many VC/growth companies may face significant challenges, and those that do not have access to additional capital are at risk of default. At the same time, market pressure, capital misallocation and asset repricing could present potential opportunities.
Divided by asset management scale
The degree of adjustment of investment strategies of family offices with assets under management of more than US$500 million is similar to that of family offices with assets under management of less than US$500 million. Specifically, larger family offices are less likely than smaller families to suspend direct investment due to economic uncertainty (33% vs. 43%), which may be due to the difference in risk tolerance between the two. Smaller family offices are also more likely to take other risk prevention measures, such as enhanced due diligence, more closely monitoring existing portfolio companies and setting aside support funds, which may have become the norm within these family offices.
By region
The response to the current environment was generally consistent across regions. Specifically, family offices in EMEA and North America closely review the financial data and milestone progress of existing portfolio companies at twice as much as in Asia Pacific (23% vs. 12%, respectively) and almost triple as Latin America (8%).
Direct investment access to trading opportunities
Global Overview
While the majority of family offices say they continue to rely on internal teams (51%), other families (49%) and networks (36%) for transaction opportunities, more and more family offices are turning to external investment advisors (24%) and banks (21%).
Divided by asset management scale
In most cases, family offices with AUM of more than US$500 million have similar access to deal opportunities than their peers with AUM of less than US$500 million. However, there is a big difference in terms of internal team channels, with larger family offices being more likely to rely on internal team channels (62% and 42%, respectively). This is easy to understand, as larger family offices tend to have more dedicated in-house staff for deal opportunities.
By region
Family offices in Asia Pacific and North America (58% and 56%, respectively) are more likely than Latin American counterparts (33%) to use their in-house teams as a trusted channel for deal opportunities. For families in Latin America (63%), deal opportunities from other families and family offices are highly credible channels. For family offices in EMEA (48%), networks and investment clubs are highly trusted channels.
Preference for the size of direct investment
Global Overview
Since last year, the preferred direct transaction investment size has been expanding, with 31% of family offices saying they prefer an investment size between US$1 million ~ US$2.5 million, and 23% of companies saying that they prefer an investment size of between US$2.5 million ~ US$5 million. Family offices that have recently ventured into direct investment are gaining experience and seem to be more willing to make larger investments. Notably, a third of respondents favor investments of $5 million or more.
Divided by asset management scale
Intuitively, family offices with larger asset management scale are more inclined to carry out large-scale direct investment. Fully 25% of larger family offices said they preferred investments of $10 million or more, while 65% of smaller family offices said they preferred investments of less than $2.5 million.
By region
In the smallest (US$1 million and below) investment size, family offices in the Asia-Pacific region account for the largest proportion (22%). Among family offices in Europe, the Middle East and Africa, 22% chose to invest more than $10 million.
Stage preference for direct investment
Global Overview
Respondents' investment preferences are mainly focused on start-up (56%) and growth-stage companies (55%). However, since 2022, respondents' interest in secondary market trading (23%) has increased. Family offices expect that some institutional investors will have to reduce their stakes when IPO opportunities are limited.
Divided by asset management scale
Smaller and larger family offices have a similar preference for the direct investment stage. Smaller family offices are slightly more keen on start-up (Series A or Series B) investments (50% and 59%, respectively) than larger family offices.
【To be continued】Please stay tuned for the next issue.