Rich families may be increasingly looking at making investments through a single entity which manages all their money, rather than a maze of different ones.
Alternative investment funds (AIFs) and limited liability partnerships (LLPs) are among the vehicles of choice, according to experts, as they look to simplify processes and ease documentation amid the Covid-19 pandemic.
“In the pandemic, families have struggled with evaluation and execution of transactions, because of complex and elaborate paperwork across a large (number) of entities they have had to operate,” said Nitin Jain, managing director and chief executive officer, Edelweiss Wealth Management. He said that Edelweiss has started to advise clients to use custody services to consolidate and manage functions. It has also suggested the use of the AIF structure which would allow multiple entities to pool money and then invest as a single unit.
“This also gives...QIB (Qualified Institutional Buyer) status and provides privacy to the family name for strategic transactions,” he added. A qualified institutional buyer can participate in certain offers of shares that are not open to regular investors. This is because they are seen to be especially competent and able to evaluate such offers.
The use of limited liability partnerships is also a route that is being explored, according to Nipun Mehta, founder and chief executive officer for multi-family office BlueOcean Capital Advisors. A family office manages the wealth and investments of a single rich family. A multi-family office provides the same service to a select number of such families. This is part of a natural evolution as people streamline operations and become more aware of existing structures and their use, according to him.
“That's becoming quite active, I would think a lot of people are doing it now,” he said.
An LLP structure combines the flexibility of a partnership with the limited liability of a company structure.
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