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What are family investment offices? What do they invest in?

Dec 06, 2019 | 4 months ago | Read Time: 3 minutes | By iKnowledge Team
What are family investment offices? What do they invest in?

What is a family office?

A family office is a corporation or a wealth management company that is set up to look after the wealth of ultra-high net worth individuals. Conglomerate founders, wealthy business families, etc. come under the ambit of ultra-high net worth individuals. These families over time accumulate tremendous wealth in the form of liquid assets and illiquid assets such as real estate. Managing these assets individually gets cumbersome which is why several families set up a family office to look after these interests.

There are two types of family offices, a Single-Family Office, which deals exclusively with the interests of one family, and Multi Family Office, which manages the interests of several wealthy families. This tradition was started by the Rockefellers, one of the largest and richest families in the world. Family offices not only provide investment advice, but also help to manage household matters and make travel arrangements for the family.

The family office employs staff to manage the household, legal, property, and tax matters for the family. Depending on the type of family offices, the functions can change. They may also look after day-to-day accounting, payroll and other functions for the family. Another function that the family offices do is work with the families for succession planning. This is an important function because it lays down who will take care of what assets after the death of the founder. For ultra-high net worth individuals, making a succession plan is the best way to avoid fighting between the survivors and an ultimate split of the assets.

Family investment offices usually invest in high risk and high return investments that often provide double or triple digit growth. One avenue for investment is high growth startups. By providing the initial seed capital and business expertise, these family investment offices exit the startups when their valuation has grown, thus providing a high return. It is their job to hunt for the best investments to put funds in. They create a long-term investment plan to put the funds to best use.

Famous family investment offices over the world:

  • Cascade Investments: Bill & Melinda Gates

Bill & Melinda Gates’ fortune is managed by Cascade Investments. This looks after their investments across different sources as well as managing charitable activities for Bill & Melinda Gates foundation. Some of the publicly disclosed investments that Cascade has made include Canadian National Railway, Republic Services, Ecolab (a waste removal company), Deere (agricultural machinery). Some of its other investments include a 4% stake in Berkshire Hathaway, a 47% stake in Four Seasons and an undisclosed stake in Diageo, the spirits company.

  • Catamaran Ventures: Narayana Murthy

The company led by NR Narayana Murthy, the founder of Infosys, has invested across sectors like healthcare, pharmaceuticals, education, technology, insurance, and retail. The company does not disclose the names of its investments publicly. Catamaran has invested in Hector Beverages, the company that manufactures the brand Paper Boat. It faced a lot of losses when SKS, a Hyderabad based lender Catamaran had invested in, went bust.

  • Premji Invest: Azim Premji

Not much is known about the investments of Wipro founder Azim Premji. Premji Invest holds a 2.2% stake in Aditya Birla Capital. It has also invested in Future Lifestyle and Fashions. It is one of India’s largest family offices which has managed to consistently stay out of the limelight. Azim Premji also focuses on philanthropy.

  • RNT Associates: Ratan Tata

Ratan Tata, the chairman emeritus of the Tata Group, makes investments in his personal capacity in different startups. He provides investment advice to Kalaari Capital and makes investments holding small stakes in startups and other companies across verticals. His personal investment in online jewelry company Bluestone made headlines. RNT has also invested in Ola, Snapdeal, and Urban Ladder.

  • Unilazer: Ronnie Screwvala

UTV founder Ronnie Screwvala operates UniLazer to manage his personal funds. Ronnie has focused on making investments in fast growing segments that work around his field of expertise, which is media and marketing. Some of his notable investments are in eyewear retailer Lenskart, online lingerie shop Zivame, and ShopClues, an online marketplace targeting Tier 2 and Tier 3 cities and towns.

Indian family investment offices are finding best investments among high growth startups and in turn are fostering a healthy startup environment in the country. Their brand value and expertise provide excellent value addition for the startups.

If you’re looking for a long term investment plan to grow your money, a ULIP or a Unit Linked Insurance Plan is an excellent way. In a ULIP, the premium is invested in different funds which are linked to the market, which means that your investment will grow with the market. ULIP’s are the best combo of life insurance and investment.

So, are you investing today? To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.

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