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According to KKR’s Family Office Survey of 75 chief investment officers around the world, family offices will invest 52% of their portfolios in alternative investments in 2023, up from 42% in 2022. It turned out that there was. Growth in alternatives is coming at the expense of almost all other assets as cash holdings fall from 11% to 9% and listed equity holdings fall from 32% to 29% from 2022 to 2023. is.
“While other allocators are exiting private placements, the group’s intention is indeed to increase its investment in the private market again in 2024 to further leverage the illiquidity premium,” the study said. states.
The move is a broader shift from family offices, a private investment vehicle for wealthy individuals, to private and alternative markets, from public markets to real estate and private equity to direct equity and ownership in privately held companies. This is part of the transition. Family offices prefer assets that have longer time horizons and grow over multiple generations than other investors, allowing them to invest in private and alternative businesses that pay a premium for more patient capital.
Family offices also have a particular advantage in the current market, as banks and more traditional financial institutions refrain from lending to businesses. Many large institutional investors are shying away from private equity, venture capital and other asset classes that are plagued by a lack of IPOs and acquisitions.
According to the report, one CIO told KKR, “This is an interesting time to be on the attack, given that many other companies need liquidity and we don’t need it.” It is said that he spoke. “We are particularly keen to operate directly, for example in areas where we have owned businesses in the past.”
Family offices plan to continue shifting capital away from cash and stocks and into alternatives this year, according to the survey. 42% plan to reduce cash holdings and 31% plan to reduce equity. Their favorite choices include private credit (45% plan to add to their holdings), followed by infrastructure (31%), private equity (28%) and commodities (18%). Masu.
Additionally, many people are planning to invest more money in the real estate field, although it is limited to a specific field. The report said family offices are concentrating on data centres, logistics and warehousing, which “captures key post-pandemic investment themes”.
Another sector currently favored by family offices is oil and gas, both in private and public markets.
“Forced selling by other investors exiting the sector is creating significant opportunities,” the study said.
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