November 28, 2023
Private Equity: Family Offices Stay Bullish on PE Funds & Direct Investments
Family offices have become increasingly important players in the space traditionally occupied by private equity and venture capital funds. According to a recent Citi Private Bank Global Family Office Survey, family offices’ interest in participation in private equity through funds and direct investments remains strong despite economic uncertainties. These excerpts summarize some of the Survey’s key findings relating to private equity & direct investments:
– Against a backdrop of rising financial markets, unrealized recession fears and multi-year high bond yields, many family offices reassessed their asset allocation more than in recent years. Over half reported increasing fixed income allocations, 38% upped private equity allocations, while 38% cut public equity allocations.
– Direct investments remain strongly in focus, with 80% of family offices engaged. But while 66% said they were seeking opportunistic deals based on attractive valuations, some 38% had paused new direct investments due to economic uncertainty.
– While family offices increasingly noted challenges around direct investments, this has not resulted in a shift out of such holdings or towards private equity funds. About half of respondents planned to maintain their allocations to private equity funds (48%) and direct (47%). And they are slightly more bullish on direct (38%) than on funds (32%).
– Net sentiment – the percentage of those planning to add to their allocations minus those planning decreases – was most positive for global developed investment grade fixed income (+34%), private credit (+30%), cash (+27%) and direct private equity (+23%). It was most negative for crypto assets (-41%), real estate (-7%) and global developed investment high yield income (-6%)
The report also says that early stage & growth stage deals were the most popular investment opportunities for family offices in all regions, while leveraged buyouts were more sought after in North America and Europe, the Middle East and Africa than in Asia Pacific and Latin America.
– John Jenkins