Family offices are expanding their exposure to private equity, with 40 per cent planning to increase their allocations to the asset class over the next two years, analysis from Bastiat Partners and Karis Capital has found.

This compares to 18.6 per cent planning an increase in allocations to venture capital/growth equity, 16.3 per cent to private credit, 14 per cent to real estate, and 7 per cent to cash.

The research, which assessed more than 75 global family offices, with over half based in Europe, also revealed that direct investments were gaining momentum, with 50 per cent intending to increase their exposure.

Bastiat Partners and Karis Capital argued that this shift reflected a growing preference for greater control and tailored investment solutions.

More than half (52 per cent) preferred participating in syndicates with pre-agreed terms rather than taking the lead in transactions, reflecting a “cautious approach and reliance on the expertise of established sponsors”.

On the other hand, 40 per cent said they were open to both leading and participating, which the report said demonstrated adaptability in seizing favourable opportunities while managing risks effectively.

As family offices expand their investment activities, they are facing several challenges, such as finding optimal deal flow and scaling staff resources, the report noted, with 20 per cent highlighting identifying quality deal flow as a primary concern.

Networking was identified as a ‘vital component’ among family offices, as 59.7 per cent saw networking with other offices as important and 73.6 per cent eager for more introductions.

The report also found an increase in formal structures in family offices, revealing that 36.1 per cent had established investment committees, 18.1 per cent had a board of directors, and 22.2 per cent utilise both.

“Family offices are adopting more active exit strategies to address the liquidity challenges in private markets, with secondaries, continuation funds, and NAV loans becoming essential tools in their arsenal,” the report stated.

“We’ve examined how family offices are evolving their strategies in private markets, with a particular focus on direct investments, creative deal structuring, and co-investments. This shift reflects a growing desire for greater control, tailored opportunities, and alignment of interests.

“Alignment of interests is a fundamental concept that, while not explicitly discussed in this presentation, lies at the heart of our conversations with family offices. Also, we’ve highlighted the current challenging market environment, marked by slow exits, elevated interest rates, and constrained liquidity options, which continue to present significant hurdles for family offices.

“Moving forward, family offices are increasingly focused on enhancing their internal capabilities, particularly in investment management, technology adoption, and governance.

“This commitment is evident from the influx of experienced professionals, coming from the buy-side world and investment banking.

“If there’s one call to action we emphasise, it’s the importance of collaboration. While we recognize that family offices often prefer to operate discreetly, building strong relationships and leveraging their networks can be invaluable.

“By doing so, family offices can access new opportunities, share best practices, and stay ahead of market trends, ensuring they remain competitive in a dynamic environment.

“The future looks bright for family offices; they are being gradually recognised as an economic powerhouse in the private markets.

“They are reshaping the standards for strategic partnerships among sponsors, consultants, companies, and investment banks.”

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