Campden Wealth announces fascinating study into Private Equity Investing and Co-Investment Activity by Family Offices

Campden Wealth announces a detailed study into Private Equity Investing and Co-investment Activity by Family Offices. 

Private equity plays a pivotal role in many of the portfolios of family offices globally, with this asset class accounting for a notable 22% of the average family office portfolio worldwide in 2018. Interest amongst the family office community continues to grow, driven mainly by outsized returns and the availability of opportunities that are deemed superior to those within public equities. This unique, proprietary research aims to better understand what motivates family offices to deploy extraordinary amounts of capital into this space. 

[London, 6 November, 2018]—Campden Wealth, the global research and networking organisation for families of substantial wealth, details the continued growth of private equity and co-investing within family offices in its new report released today titled, Private Equity Investing and Co-Investment Activity by Family Offices.

The report, developed and published with support from the global investment firm KKR, provides a deep dive analysis into why key trends within the private equity and co-investing arena have occurred. Over 75 family offices globally completed a survey on the topic. The report also features case-studies with senior family office executives who discuss their experiences with private equity and co-investing.

Fast facts you need to know:
 

• Allocations to private equity are predicted to rise 73% between 2017 to 2019, or USD $51 million to USD $88 million per family office over this period.

 

• Family offices reported that an incredible 91% of their private equity investments either met (53%) or out-performed (38%) their expectations in the last 12 months. Their average private equity return stood at 14% in 2017, and respondents predicted that their average return for 2018 will again be 14%, but will rise to 18% in 2019.

• Healthcare is the most popular sector for family offices’ private equity fund investment, according to 55% of respondents.

 

• More than half (53%) of all private equity fund investments are put towards growth capital deals, while 28% go towards leveraged buyouts and 19% venture capital.

 

• (67%) of respondents believe that family offices’ demand for co-investing opportunities will increase over the coming 12 months. Importantly, zero argued that the demand would decline.

 

• Over half (57%) of the family offices stated that ‘lower middle markets’ offer the best opportunities for co-investment deals, followed by middle markets (26%).

Dr. Rebecca Gooch, Director of Research at Campden Wealth, commented:

 

“Across the globe, family offices’ allocations to private equity are predicted to rise over the coming year. The family offices we studied for this report predicted a significant 73% climb in investment between 2017 and 2019. That translates into an average allocation of $51 million per family office in 2017 to a projected $88 million in 2019.  This will certainly solidify private equity’s place as the second most significant asset class to family offices, trailing only behind equities.”

It is also interesting to report that a significant nine out of ten of family offices’ private equity investment returns either met or exceeded expectations this last year. With family offices projecting that their average returns will increase from 14% in 2018 to 18% in 2019, this supports the position that many have been taking in terms of embracing a somewhat higher risk, more illiquid investment strategy within their portfolios.”

 

She further remarked: 

 

“Demand for co-investing is increasing, with two-thirds of family offices expecting to see a rise in calls for co-investing opportunities over 2019. Family offices would be wise, however, to choose their co-investment partners carefully. The report uncovered that experience and most importantly a track record of value creation are key criteria. Financial alignment is also key.” 

 

Jim Burns, head of EMEA client and partner group, and head of individual investor business at KKR, said: “Large family offices are often well-suited to invest in private equity, given their long-term investment horizon and flexible investment mandates.  Additionally, many family offices have a different liquidity profile than other investor types – a characteristic that lends itself nicely to investing in private equity.”

 

He continued, “Beyond regular-way fund investing, family offices are increasingly looking for creative ways to gain private equity exposure, including co-investing and direct investing into companies. While this can prove cost-effective in certain situations and gives investors the comfort of diligencing assets on a deal-by-deal basis, this approach requires an appropriate amount of committed capital, as well as dedicated investment resources, to deliver the returns expected by the family over time.” 

 

To obtain the report, visit: campdenresearch.com. Follow @CampdenResearch and #Top75

 

For comments, inquiries and more information, contact: 

Dr. Rebecca Gooch, director of research, Campden Wealth

+44 20 3763 2806 rebeccagooch@campdenwealth.com 

 

Kristi Huller or Samantha Norquist, KKR

+1 212-750-8300 media@kkr.com

 

About Campden Wealth 

Campden Wealth is the leading independent provider of information, education, and networking for generational family business owners and family offices globally in person, in print, via research, and online.

Campden Research supplies market insight on key sector issues for its client community and their advisers and suppliers. Through in-depth studies and comprehensive methodologies, Campden Research provides unique and proprietary data and analysis based on primary sources.

Campden Wealth also publishes the leading international business title, CampdenFB, aimed at members of family-owned companies, family offices, and private wealth advisers.

Campden Wealth further enhanced its international reach and community with the acquisition of the Institute for Private Investors (IPI), the leading membership network of private investors in the United States, founded in 1991, and with the establishment of Campden Family Connect PVT. Ltd., a joint venture with the Patni Family in Mumbai, India in 2015.

 

About KKR 

KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.