#Four Keys Trends Driving the Family Office's Growth
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From NRIs coming back to India to next-generation entrepreneurs exiting from their existing business and focusing on the importance of wealth creating, family offices (FOs) are gaining popularity in India.
Even though India is at a nascent stage when it comes to this business model, the entire ecosystem is keen to see how the family offices are going to change wealth creation scenes in India.
In conversation with Entrepreneur India, FOs share the key trend driving this segment towards the upwards growth:
FOs have now started to look beyond traditional investment avenues. They are keen to look into ancillaries investment or assets that contribute to their actual business which also includes startups.
Apurva Damani, Managing Director - Artha India Ventures shares, “FOs are looking for investments that can be ancillaries or contribute to their main business as long as the investment is not directly competing with the family office's main business. They are also looking to diversify and are open to investing in PE and VC funds, which are new ways of generating wealth beyond the public markets.”
Earlier FOs were keen to donate money to NGOs and other social institutions under charity. However, this outlook is now changing as investment managers are now interested in social impact companies.
Rajmohan Krishnan, Managing Director and Principal Founder, Entrust Family Office Investment Advisors says, "Social impact companies are profit-making organizations primarily set to create a huge impact amongst various societies and causes."
“The profits made are redeployed in Section 8 companies or social impact companies. While on the other side, they will distribute meagre profits to the investors, as the investment is not with a profit motive, but to achieve sustenance,” he noted.
Wealth Management for Next Generation
Apart from traditional services such as taxation, asset management, investments, FOs have now started serving multi-generation members.
Angela De Giacomo from Bissell Family Office shares, "FOs are working on increasing, preserving wealth and transferring it to the next generation as it is easier to get all these services from one trusted team. This team also looks after other needs of the family like tax planning, wealth creation, succession planning, etc."
Apart from the ancillaries and social investments, FOs are also looking at alternative investment arena which according to Krishnan includes distressed assets, arbitrage opportunities, hedge funds, long-short funds.
“Families are also looking at owning islands in exotic locations and also residences in high street locations in some of the best cities in the world, primarily to spend their leisure time with family and friends. Art is again an interesting area where families are keen to invest. This is more of a passion than an investment,” he added.