WEALTH MANAGEMENT
Family Values Many family businesses in the Middle East region have grown into conglomerates with diverse portfolios, well-defined governance structures and cash flow management making them resilient to changes in the market
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amily-run businesses are the engines of growth globally and a driving force behind economic diversification in the GCC region, responsible for 60% of the private sector. The outbreak of COVID-19 drastically changed the operating environment, creating significant challenges for family offices in the Middle East region, but for some, the pandemic created unique opportunities across the entire family ecosystem – the family, the operating businesses and investments, and private wealth. PwC defined family offices as organizations that are created to serve several purposes but normally to oversee and manage the financial needs of a family including effectively transfer wealth from one generation to the other.
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These trusted groups of financial and legal professionals are helping family Ultra High Net Worth (UHNW) investors effectively manage their fortunes. Family offices can potentially be briefed to follow specific environmental, social, and governance (ESG) goals as investors look to boost their legacy as well as their bottom line. T h e o u t b re a k of p a n d e m i c i s making the technology and innovation industry, real estate, healthcare and hospitality sectors, key investment areas for family offices as part of their broader strategy to diversify their portfolios. “Family-run businesses play a valuable role in the Middle East region’s private sector economy, where they contribute 60% to GDP and employ over 80% of the workforce,” said EY.
Banking and Finance news in the MEA market
It is worth noting that family businesses in the Middle East differ from a generational perspective. Most family-run businesses under the leadership of successors are taking a fresh look at their portfolios and operating structures, finding ways to become leaner and more competitive. Deloitte said that in response to the changing operating environment, family offices had to quickly adapt business models and strategies to ensure continuity and provide a platform to thrive. The double whammy of the coronavirus and plunging oil prices together with the evolving tax environment and ongoing liquidity issues forced several family-run businesses to revisit and calibrate their strategies. Many family businesses in the Middle East region have grown into conglomerates with diverse portfolios, well-defined governance structures and cash flow management making them resilient to changes in the market. Some of these businesses have been operating for years, building huge cash reserves that are allowing them to invest in diversified assets classes and sometimes out of the region too.
Investment trends The economic impact of the prolonged pandemic together with regulatory and
