Signs that family offices will keep overall portfolio allocation in private equity at or slightly above 15% are expected to continue as interest rates stay low and uncertainty and volatility in global public markets and geopolitics prevail into 2020.
This allocation away from the traditional asset classes of equities and fixed income improved overall performance in a challenging year for stocks and bonds.
The latest family office to take a stake in a private equity firm is Ottawa Avenue Private Capital (OAPC), the Michigan-based investment advisory firm that manages private equity and alternative asset investments on behalf of the DeVoss family office, RDV Corporation.
OAPC has acquired a passive minority equity interest in the private equity firm, Nordic Capital. The investment could ensure the private equity firm has a long-term investor and co-investor.
However, with this latest investment, OAPC could also benefit from Nordic Capital’s deal profits and fund management fees, given its stake in the business.
Since raising its latest Fund of EUR 4.3bn, Nordic Capital has made 11 growth-oriented platform investments and has also recently put further emphasis behind its North American Healthcare strategy by opening an advisory office in New York.
According to the Wall Street Journal and other news sources, the DeVos family’s wealth is derived from Amway Corp., a multilevel marketing firm co-founded by Mr. DeVos’s father, Richard Sr., and also from Prince, an auto-parts company started by Edgar Prince, Mrs. DeVos’s father.
Ottawa Avenue had about $9.4bn in regulatory assets at the end of 2018.
This news backs up findings in the latest FOX Global Investment Survey, which reported that family offices continued to move into private investments —with a third of the overall portfolio allocated to Private Equity (17%) and Real Assets (16%).
Other asset management firms to take their private equity allocation to the next level include Dyal Capital Partners, a division of Neuberger Berman, which has taken stakes in private equity firms including HGGC, Bridgepoint, Silver Lake, Vista, and Vector Capital.
Goldman Sachs and Blackstone have also paired up to acquire a stake in private equity firm Francisco Partners.
The Family Wealth Report estimates that there were about 6,000 family offices operating in the United States, however, Campden Wealth puts the figure at 7,300. According to the Wall Street Journal, the threshold for single-family offices is generally considered to be $100m due to the costs and challenges of running such an entity.
In the United States alone, there are approximately 20,407 individuals with more than $100m in assets, as reported in the Credit Suisse 2018 Global Wealth Report.
