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Private market investments accounted for 18 per cent of asset allocation by family offices and UHNIs: Report

BL Bengaluru Bureau Bengaluru | Updated on December 17, 2021

Over 40 per cent of family offices have doubled their allocation to private markets in the past five years, the report said

Private market investments accounted for 18 per cent of asset allocations made by family offices and UHNIs in 2021, as compared to a 15 per cent allocation to other alternatives (real estate, infrastructure, art, etc.), 20 per cent allocated to fixed income, and 36 per cent to listed equities.

These findings were reported by The Private Market Monitor produced by trica in partnership with AZB & Partners and EY, in a survey of over 100 family offices and UHNIs (ultra high net worth individuals).

The report also found that over 40 per cent of family offices have doubled their allocation to private markets in the past five years. The growing number of initial public offerings and acquisitions in the Indian start-up ecosystem has created a new category of first-generation UHNIs that are pro-actively exploring the family office route to manage their wealth.

“India is the third-largest in the world in terms of the start-up ecosystem, but we only have 5 per cent of the total unicorn start-ups in the world, 80–85 per cent is still from the US and China. The reason is that we still have opportunities for growth left. Over the next decade, the private market is where the wealth will be created. 82 per cent of family offices noted non-linear returns as the top reason for participating in start-up investments. Also, with the exits coming through with IPOs – people see it as a good area to make huge exponential growth,” Nimesh Kampani, Co-founder and CEO of trica told BusinessLine.

Over 83 per cent of family offices have an allocation to private markets, which is over 10 per cent of their overall asset distribution. This number has been steadily increasing over the past five years for 50 per cent of the respondents, and has doubled for 40 per cent of the participants.

Further, 50 per cent of family offices surveyed for this report preferred seed to Series A stage to enter a start-up investment, 40 per cent preferred late to pre-IPO transactions, while 25 per cent stated a preference for having a well-distributed portfolio across stages. In terms of sectors, fintech (82 per cent) and enterprise tech (71 per cent) were the top two sectors of choice for family offices and UHNIs, followed by other sectors such as consumer tech, healthcare, agritech, and edtech.

Published on December 17, 2021

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