Family offices are expanding globally and diversifying their holdings

Business MInutes

A recent report by PwC India highlights the growing trend of family offices in India shifting from traditional investments to investing in startups, diversifying their portfolios, and seeking higher returns. The number of family offices in India has increased from 45 in 2018 to over 300, with promoters building impressive businesses in Tier 2 and Tier 3 cities. Fintech is a key attraction among Indian family offices, raising a total funding of USD 853.6 million in CY23. The report also highlights five perceptible trends shaping the future of family offices in India: transforming into holistic service providers, investing in startups, diversifying portfolios, and seeking higher returns; adopting new technologies such as AI, machine learning, and data analytics; expanding investment horizons beyond domestic markets; and prioritizing responsible investing. 

Family offices are uniquely positioned to address the growing demand for specialized services tailored to high-net-worth individuals and business families, driven by factors such as the growing ultra-high-net-worth population, a focus on generational wealth transfer, global asset diversification, and the rise of impact investing. However, adapting to the evolving investment landscape and hiring the right professionals will be crucial for their continued success. The Indian economy is on a roll, with family businesses contributing to its expansion, both large conglomerates and small-to-medium-sized enterprises across sectors such as manufacturing, retail, real estate, healthcare, and finance. Jayant Kumaar, Partner, Deals and Family Office Leader, PwC India, said that family offices are transforming wealth management by embracing technology, global diversification, and ESG principles. 

Addressing trust, succession planning, and risk management will be key to their success. Despite these evolving trends, family offices face several challenges, including building trust within family members and the family office, defining key performance indicators (KPIs), addressing cybersecurity threats, regulatory compliance, and privacy concerns, and attracting skilled professionals. Family offices require a holistic approach, binding family members with a common purpose and values, and focusing on six core qualities: legacy preservation, unity and purpose, wealth stewardship, relationship building, adaptability and innovation, and talent development.

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