Family offices betting big on unlisted space

Private markets provide access to disruptive segments which are not available in listed markets. Also, the next generation in family offices, being more exposed, aware, and informed about the potential of such businesses, is driving this trend towards private markets, said Nishant Agarwal, Senior Managing Partner and Head of Investment Advisory and Family Office at ASK Private Wealth.

Family offices are increasingly favoring private markets over traditional investments in publicly-listed companies, according to industry experts. Their exposure to listed companies is decreasing, largely due to the compelling opportunities in the tech sector that have emerged in private markets post-COVID-19.

For ASK Private Wealth, an average percentage of allocation to private markets has increased from 10-15 percent before COVID-19 to 20-25 percent currently. While for Client Associates, this number is at 20 percent while it was at 10 percent during COVID-19.

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"Post COVID-19, a lot of capital has come from family office to the private markets in India," said Rohan Paranjpey, managing director, and head of Alternative Investments at Waterfield Advisors, which manages around $4 billion.  He added that the pandemic accelerated individuals' adaptation to technology for various purposes, such as online food delivery, medicine, and grocery shopping. This shift has increased the popularity of tech-based startups, leading to increased investment interest in these ventures.

Private markets provide access to disruptive segments that are not available in listed markets. Also, the next generation in family offices, being more exposed, aware, and informed about the potential of such businesses, is driving this trend towards private markets, said Nishant Agarwal, Senior Managing Partner and Head of Investment Advisory and Family Office at ASK Private Wealth.

Another reason for an increase in allocation towards private markets is because it is seen as a significant form of diversification due to lower price volatility compared to public markets, said Sandeep Das, managing director and chief executive officer of Centrum Wealth.

Agarwal also said that since family offices made money after the run-up in the listed space in the last one year, they have more risk appetite now to invest in the unlisted markets.

Which segments is the money going to? 

Paranjpey said that family offices are investing via VC funds, PE funds, and venture debt in private markets.  More money from the family office space is going to tech, healthcare, BFSI, and consumer segments traditionally, said Ashutosh Bishnoi, director at Multi-Act.

Das said that a lot depends on what stage investors want to invest in the company.  "We have seen pre-IPO investment opportunities being quite popular as there is visibility of listing and subsequent liquidity in the stock on the exchange after listing," said Das.

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