Private equity is becoming a core asset class with 40% of respondents planning to increase allocations to PE transactions over the next two years, according to findings from an inaugural report into how family offices plan to allocate to private markets based on research conducted by Kharis Capital, a consumer-focused private equity firm, and Bastiat Partners.
The higher PE exposure is more than double planned allocation increases to other asset classes, namely VC/growth equity at 18.6%, real estate at 14% and private credit at 16.3%, the 'Family Offices and the Future of Private Markets: Insights into the Shifting Dynamics of Private Investments in 2024' report found.
It surveyed 75+ global family offices and drew on conversations with 300+ family offices over the last decade, underscoring family offices’ commitment to expanding their exposure to private markets and their bright future as economic powerhouses in this investment landscape.
Key findings further included that direct investments are gaining momentum, with 50% of family offices intending to increase their exposure through independent deals and co-investments with sponsors, reflecting a growing preference for control and tailored opportunities.
Quality deal flow remains a key concern, as identified by 20% of respondents, highlighting the need for effective sourcing strategies and robust networks with other family offices. Indeed, 59.7% of respondents view networking with other family offices as important with 73.6% eager for more introductions – especially in North America.
Family offices are increasingly exploring niche and emerging asset classes like real estate tax liens, niche secondaries and whiskey aging, among others.
The report also explored the strategies family offices are adopting to support their push into private markets, touching on tactics like employing in-house investment committees, increased participation in re-capitalisations and a shift towards evergreen funds and holding company models.
The report's foreword stated: "Our motivation for producing this report stems from a clear gap in the market. While there is no shortage of reports of family offices and their investment interests, few focus exclusively on private markets, which we believe is where some of the most significant shifts and opportunities are unfolding.
"Drawing on data from our survey of over 75 global family offices, this report provides valuable insights into the latest trends shaping this dynamic space. It highlights how practitioners can remain at the forefront of best practices and key investment strategies."
