- They’ve raised allocations to listed companies, private equity
- Private equity, listed stocks make up half of their portfolios
Citigroup Inc.’s family office clients are reducing their cash holdings to make investments in riskier asset classes, reflecting their increasingly optimistic outlook on financial markets.
Almost half of investment firms for the world’s super-rich have increased their allocations to listed companies and private equity this year from 12 months before, with more than a third cutting cash holdings, Citi found in a survey of 338 family offices.
Family offices now feel more bullish about direct private equity investments, with almost half of the respondents expressing positive sentiment over the next year for deals involving buying directly into a company or asset rather than investing through a fund or intermediary. Allocations to funds and direct deals in private equity as well as listed stocks made up almost half of the family offices’ portfolios on average, according to Citi’s Global Family Office 2024 Survey Insights.
“Cash is no longer king” for money managers of the ultra-rich, according to the report, which was released Wednesday. “Family offices have made significant portfolio shifts since last year.”
Family offices seeking direct deals include Growth Partner, which manages money for HomeServe founder Richard Harpin, who sold the household repair business to Brookfield Asset Management last year for £4.1 billion ($5.4 billion). Harpin’s family office is deploying a large chunk of the roughly £490 million that he and his family pocketed from the deal into UK businesses.
Family offices have helped to fuel a resurgence in private equity buyouts and are increasingly adopting activist strategies in a growing sign of sophistication for their money-management activities. They include Mithaq Capital, the family office of a dynasty tied to one of Saudi Arabia’s largest banks, which boosted its stake this week in US clothing retailer The Children’s Place, according to regulatory filings.
Sentiment soured on assets including private credit, emerging-market debt and art, the survey showed.
Interest rates, relations between the US and China and overheated market prices ranked among family offices’ top economic concerns.
“Family offices have stopped seeing inflation as a big risk,” said Hannes Hofmann, global head of the bank’s Family Office Group. “They are putting their money to work.”
Written by: Benjamin Stupples and Annie Massa @Bloomberg
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