Generating substantial returns by managing wealth not an easy task, says Abishek Laxminarayan, Strategic Advisor, Sharrp Ventures

Abishek Laxminarayan, Strategic Advisor, Sharrp Ventures and Rahul Goswami, Co-founder & Managing Partner, Greenstone

Generating higher-than-market returns by managing wealth, finding the right investment opportunities and mitigating risk is not an easy task, according to Abishek Laxminarayan, Strategic Advisor, Sharrp Ventures.

Speaking at the Moneycontrol Global Wealth Summit on 'India’s Family Office Boom,' Laxminarayan highlighted that delivering above the market returns and increasing value of investment is not an easy in the long run.

"It takes a lot of planning, it takes a lot of it takes a lot of courage, it takes a lot of humility. I have seen that in the families I have worked with. So yes, I disagree with that even if I think it is a wonderful opportunity for operating families to give back to the ecosystem," said Laxminarayan, who works with the family office of the Marico founders the Mariwala.

Laxminarayan's comments come just a few weeks after Uday Kotak and Harsh Goenka, chairman of the RPG Group called out changing priorities of India’s young billionaire heirs. 

The Sharrp Ventures' strategic advisor said that family offices have the additional advantage of supporting first-time entrepreneurs and entrepreneurship, which takes a lot of courage.

Rahul Goswami, Co-founder & Managing Partner, Greenstone also echoed Laxminarayan's comments saying that there is merit to both arguments that it is hard to generalise how people work in family offices.

"Of course, there probably are some individuals who enjoy the lifestyle, maybe don't have the discipline and are not as accountable. But there are also examples of those places that maybe validate (Laxminaryan's) example. There are certain elements of managing family office which are not glamorous but extremely valuable," Goswami said.

Goswami also said that the skillset required to create wealth in the first place may not be transferable into managing wealth and investment allocation to generate substantial return-on-investment in the short and long term.

In February, Uday Kotak had voiced concerns about India's economic future as he sees a decline in economic 'animal spirits'. He warned of declining entrepreneurial drive among younger business families as they try to shift focus from running businesses to managing investments.

Similarly, Harsh Goenka raised a critical point that today’s heirs are spending more time in luxury settings and managing wealth than building businesses.

"Instead of rolling up their sleeves and sweating it out in the trenches of business and industry, they’re busy trading, speculating, and running family offices," Goenka said in an opinion piece in February. His words struck a chord with a growing sentiment that India’s future business leaders are shying away from the hard work and responsibility that once defined the nation’s entrepreneurial elite.

Following these comments, Marico founder Harsh Mariwala stressed that through Sharrp Ventures, we have seen how family offices can shape industries, support entrepreneurs, and drive long-term growth.

"There is much conversation about whether young business heirs are choosing investment over hands-on leadership. The truth is, family offices are doing much more than managing wealth. They are backing businesses, funding innovation, and strengthening India’s position in the global economy," Mariwala had said in an opinion piece for Moneycontrol.

Indian family offices collectively manage an estimated $30 billion in assets under management (AUM) across approximately 300 family offices. This number is expected to reach $45 billion over the next three years, reinforcing the shift towards domestic wealth deployment.

As per a June 2024 report by PwC India, there are over 300 family offices in India, as against 45 in 2018, and the number is set to rise exponentially, with promoters building impressive businesses in Tier 2 and Tier 3 cities.

According to experts, the uptick in family offices in India is replicating the trend that has happened in the developed markets.

As per PwC India, family offices are transforming into one-stop solutions, offering a wide range of services beyond wealth management. “They provide professional guidance on compliance, legal issues, taxation, investment strategies, and strategic decision making. This trend helps families streamline their operations and achieve their long-term goals,” PwC said.

While there is no standard portfolio size for creating a family office, some experts put the minimum investible sum at least at $100 million (around Rs 850 crore), while others put it at Rs 2,000 crore.

Some of the notable family offices include Burman Family Holdings, Premji Invest, Ajay Piramal SFO and Catamaran (Family Office of Narayana Murthy).

Last year, speaking at the Indian Family Business Awards in New Delhi on December 3 Sunil Kant Munjal, chairman of Hero Enterprise, emphasised the vital role family businesses play in the global economy, highlighting their growing influence and contribution. Munjal remarked that family businesses are often misunderstood despite their critical economic impact.

Munjal noted that family offices are now a significant source of funding for startups and early-stage companies. However, he pointed out that they are not the sole financial resource, with angel networks, venture capital funds, and private equity also playing vital roles. “Family offices bring not just capital but also valuable expertise and mentorship, which are crucial for the success of emerging enterprises,” he added.

Amitabh Kant, G20 Sherpa had also echoed these comments saying that India's ambition to have a $30 trillion GDP by 2047 cannot be achieved without family-owned businesses.

Kant said family-owned businesses are critical for the country growth because they have good governance and effective succession which ensures sustained success.

"For India to grow at high rates of 8-9 percent per annum over three decades, or if India should become a Viksit Bharat, meaning its GDP has to grow from $4 trillion to $30 trillion - the country’s GDP has to grow to 9x. Its per capita income has to grow 8x and manufacturing has to grow 16x. That is the challenge for India," Kant had said.

"My belief is that this cannot be done without family-owned businesses, because they contribute over 75 percent of India's GDP," he added.