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hose who haven’t heard the term ‘family office’ (FO) before may think it’s referring to some sort of service-oriented business run by a friendly mom-and-pop duo. Far from the quaint image this impression suggests, FOs control vast amounts of money on behalf of the world’s wealthiest. Ultra high net worth individuals (UNHIs) are people who have accumulated vast fortunes, usually through one or more business empires, and are looking to grow that wealth through investments and other endeavors. Private wealth managers are often deputed to handle investments and portfolios, but many UNHIs choose to set up FOs instead. Looking at the numbers, it’s clear that UNHIs aren’t as rare a breed as one would imagine. Estimates vary, but the 2016 EY Family Office Guide approximates the number of single-FOs to be ‘at least 10,000’ globally, and others peg the number at 5,000 to 6,000. Defined as having at least US$200 million worth of assets under management, FOs have largely been concentrated in the United States and Europe. However, Asia-Pacific UHNIs are not to be ignored: the UBS 2018 Global Family Office Report found that 17% of the offices surveyed are based in this region. The essential difference between an 36
JUMPSTART MAGAZINE
April 2019
Family Offices Asia’s Biggest Open Secret
Why Asia’s under-the-radar investors are putting money into tech startups
By NAYANTARA BHAT
FO and a wealth manager as told by Eva Law, Chairman and Founder of the Association of Family Offices in Asia (AFO), is that an FO manages much more than just money. Preventing future conflicts, managing family disputes, and preparing for family and enterprise succession are a few of the tasks handled by FOs. Since the goal of FOs is to grow the family fortune, their investing strategy is generally risk-averse, relying on investments that will guarantee returns. But according to Law, the past few years have marked an interesting and out-of-character trend: investing in startups. Investing across generations
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aw notes that the historically high price of real estate globally in 2018 caused FOs to start “selling their portfolios and reducing their exposure in real estate.” FOs needed a new investment allocation for the money that was freed up by real estate divestment, and where better to put that money than into tech? At the forefront of pushing tech investments is the ‘next gen,’ or the children of tycoons and billionaires who already hold executive positions in their families’ enterprises. They often act as financial investors, putting money into a number of different projects, but some have other motivations–demonstrating
