Indian family offices are shifting from traditional investments in real estate to technology, healthcare, and retail stocks, driven by a new generation of entrepreneurs. These family offices are now engaging in stock market investments, including pre-IPO placements and secondary market operations.
Falguni Shah from PwC India notes that younger entrepreneurs, particularly those born after 2000, see technology as crucial for business operations. They are building teams with technological expertise to manage family offices effectively.
Media reports indicate that Coca Cola is negotiating with Indian family offices to sell part of its stake in its Indian bottling company for $1 billion. Similarly, hospitality startup Oyo is looking to raise Rs 1,000 crore from family offices, valuing the company at $2.5 billion.
Prominent family offices investing in stocks include those of L&T Chairman AM Naik, Marico Chairman Harsh Mariwala, the Burman family, Bhartia family (Jubilant group), and the Parekh family (Pidilite Industries). Crishna Godrej and her daughters are also planning to establish a family office.
Experts attribute the stock market boom to promoters selling stakes in traditional businesses and seeking new opportunities. Ketan Dalal from Katalyst Advisors explains that favorable valuations and reduced stigma around selling family businesses drive this trend. Many new entrepreneurs are setting up family offices with significant funds, often Rs 250 crore and above.
Punit Shah from Dhruva Advisors notes increased interest in establishing Family Investment Funds (FIFs) in GIFT City, although no registrations have occurred yet due to regulatory uncertainties.
Dalal highlights that managing substantial family funds often involves a mix of instruments, such as family offices, multi-family offices, and alternative investment funds (AIFs).
As Indian families accumulate wealth, there’s debate about setting up offices in India or overseas. Factors influencing this decision include fund availability through the liberalized remittance scheme, family members abroad, and regulatory considerations.
Dalal and Shah point out that family offices are diversifying their investments to manage geographical, currency, and political risks. Overseas offices are becoming common, and family offices are exploring various investment classes.
Tax regimes also play a role in deciding the office structure. Family offices typically operate as corporations or Limited Liability Partnerships (LLPs), with different tax implications for each.
Overall, family offices are investing in healthcare, consumer retail, and tech companies, providing long-term capital to grow wealth across generations. They are also raising funds by selling stakes in traditional businesses.
