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© Family Office Consulting GmbH, 2014- 1 - Prestel & Partner, Family Office Forum, Zurich 2014 Zurich, November 2014 Private Equity - Safe haven for Family.

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Presentation on theme: "© Family Office Consulting GmbH, 2014- 1 - Prestel & Partner, Family Office Forum, Zurich 2014 Zurich, November 2014 Private Equity - Safe haven for Family."— Presentation transcript:

1 © Family Office Consulting GmbH, Prestel & Partner, Family Office Forum, Zurich 2014 Zurich, November 2014 Private Equity - Safe haven for Family Offices? Some insights regarding asset allocation, investment criteria and regional focus

2 © Family Office Consulting GmbH, The largest Family Office-Study in Germany ever: Interviews concerning Private Equity & Venture Capital with approximately 190 Family Offices! Selected Structural Data of Participating Family Offices Ratio in % (n=190) AuM (in million EUR): ≤ 50 million ≤ 100 million ≤ 250 million ≤ 500 million ≤ 1 billion ≤ 2.5 billion > 2.5 billion Average AuM (n=190; n.a.=37,9%) Single Family Offices (SFO; n=127) Multi Family Offices (MFO; n=54) Bank-Related Family Offices (BFO; n=9) Participants: 190 Family Offices Method: Telephone Interview Research conducted: Q AuM: >140 billion EUR Average AuM: 930 million EUR 26 family offices, AuM > 1 billion EUR Family Office Segments:

3 © Family Office Consulting GmbH, Current Average Asset Allocation of those Family Offices participating German Family Offices holding off on PE-/VC investments in comparison to Swiss Family Offices 1) Mean value of all investors, without n.a. 2) Number of answers for current portfolio structure Portfolio ratio in %, n=190 * Source: Research, Family Office Consulting GmbH Alternative Investments Market Study PE&VC Germany 2014 Average Germany 2014* Average Switzerland 2014* Stocks Bonds Money market Cash Real Estate Other Real Assets Alternative Investments Private Equity Venture Capital Hedge Funds Portfolio Ratio in Per Cent In comparison to Benchmark: PE-affine German Family Offices as participants of current market study, therefor less real assets Investments in Venture Capital by German Family Offices represented marginally By far higher affinity to Alternative Investments amongst Swiss Family Offices

4 © Family Office Consulting GmbH, When selecting external managers for PE-/VC investments, German Family Offices attach high importance to historic Track Record Selection of decision criteria for an external manager Track Record Competency, Know how, Expertise People, Team, Management Name, Reputation Creditworthiness, Reliabilty, Trust Strategy Line of business, Specialization Own Investment of Manager Investment model Transparency Fees Other Number of nominations (n=190; several nominations possible) Selection criteria for external managers Three-fourths of those Family Offices who confirm know how in Private Equity & Venture Capital exclusively work with well-established providers 30% of those Multi Family Offices participating are interested in „first time funds“ 16% of those Single Family Offices participating show investment interest in „first time funds“ 64

5 © Family Office Consulting GmbH, PE-/VC-Investments outside of Germany, Austria and Switzerland are typically not the case amongst German Family Offices Attractive Investment Regions in Private Equity & Venture Capital Germany (n=190) Switzerland (n=47) Preferred target region is the country of origin Swiss Family Offices are much more invested internationally than German Family Offices Swiss Family Offices have a higher investment affinity to Asia and South America Swiss Familiy Offices also frequently consider Africa, Middle East, Oceania and North America as attractive regions Germany Austria / Switzerland Europe (except Germany, Austria, Switzerland) USA Canada South America Middle East Asia Australia, New Zealand, Oceania Africa Attraction level in per cent

6 © Family Office Consulting GmbH, Whether own PE-/VC-Investments or external mandates - Many German Single Family Offices lack experience… Experience with Investments in Private Equity & Venture Capital Total (n=190) SFO (n=127) MFO (n=54) BFO (n=9) Venture Capital Private Equity Own investments Experience with funds actively managed by third parties (Both options possible) MFO are frontrunners regarding own investments BFOs prefer to allocate money to external parties Large Family Offices have considerably more experience with Private Equity SFO=Single Family Offices; MFO=Multi Family Offices; BFO=Bank-related Multi Family Offices

7 © Family Office Consulting GmbH, …Swiss Family Offices, however, have a considerably larger Treasure Trove of Experience Experience with Investments in the area of Private Equity & Venture Capital Total (n=47) SFO (n=19) MFO (n=21) Venture Capital Private Equity Experience with funds actively managed by third parties (Both options possible) SFO are extraordinarily experienced regarding own (direct) investments MFO are clear frontrunners regarding the allocation of external mandates SFO=Single Family Offices; MFO=Multi Family Offices Own investments

8 © Family Office Consulting GmbH, Existence of own PE & VC strategy Yes No Existence of own strategy and own experts for Private Equity & Venture Capital within a team German Family Offices often have no clear strategy and no profound knowledge regarding Private Equity & Venture Capital… Existence of own PE & VC team members Total (n=190) SFO (n=127) MFO (n=54) BFO (n=9) Only one third of the participating Family Offices have a strategy and corresponding team members regarding PE & VC Much higher professionalism amongst Family Offices above 500 Mio. EUR AuM and amongst Multi Family Offices SFO=Single Family Offices; MFO=Multi Family Offices

9 © Family Office Consulting GmbH, Existence of own PE & VC strategy Yes No Existence of own strategy and own experts for Private Equity & Venture Capital within a team.... contrary to Swiss Single Family Offices who have a higher level of professionalism with regard to strategy and team Existence of own PE & VC team members Total (n=47) SFO (n=19) MFO (n=21) More than 40% of the Swiss Family Offices participating have a strategy and an experienced team regarding Private Equity und Venture Capital About two third of the Swiss Single Family Offices participating have a strategy and an experienced team regarding Private Equity und Venture Capital SFO=Single Family Offices; MFO=Multi Family Offices

10 © Family Office Consulting GmbH, Investment signals for PE/ PE/VC amongst German Multi Family Offices, rather moderate ambitions amongst German Single Family Offices Ratio of German Family Offices with already settled and/or planned investments within the next months Total (n=190) SFO (n=127) MFO (n=54) BFO (n=9) Venture Capital Private Equity Planned Investments Settled Investments Average performance expectation: PE: 12,1%, VC: 16,7% Investments: Direct: > 50%, FoF: 21%, Single Funds: 16% Focus: Direct Investments Germany, EU; at times single funds USA or Asia Selection focus/subjects (i.a.): Pharma, IT/E-Commerce, New Media, Infrastructure 66% of Family Offices who have already invested plan further PE-/ VC-Investments SFO=Single Family Offices; MFO=Multi Family Offices; BFO=Bank-related Multi Family Offices

11 © Family Office Consulting GmbH, Clear PE-/VC-Investment signals amongst Swiss Multi Family Offices, even stronger ambitions amongst Single Family Offices Ratio of Swiss Family Offices with already settled and/or planned investments within the next months Total (n=47) SFO (n=19) MFO (n=21) Venture Capital Private Equity Planned investments Settled investments Average performance expectation: Private Equity: 14,4%, Venture Capital: 16,6% Investments: Direct investments: 61%, FoF: 4%, Single Funds: 27%. Focus: Direct investments, widely spread internationally, single funds Africa, MENA, South America Selection focus/subjects (i.a.): Pharma, Food, Industry, Renewable Energies More than 70% of Family Offices who have already invested plan further PE-/VC-Investments SFO=Single Family Offices; MFO=Multi Family Offices

12 © Family Office Consulting GmbH, How family offices from Germany and Switzerland try to manage the balance between achieving profit and preserving wealth - examples (1/3) AuM = Assets under Management, FTE = full time equivalents, ROI = Return on investment, MM = money market, AI = Alternative investments Source: Research, Family Office Consulting GmbH Case A Multi Family Office (three families) 400 Mio. EUR AuM, 20 FTE Multi Family Office (three families) 400 Mio. EUR AuM, 20 FTE 1.Inflation protection 2.Preservation of capital 3.Direct influence 4.Continuous cash flows 1.Inflation protection 2.Preservation of capital 3.Direct influence 4.Continuous cash flows > 6% p.a. The somewhat old-fashioned, still successful conservative way History Family sold business 40 yrs ago Equities: 0% Bonds: 0% MM/Cash: 10% Real Estate (Core): 90% 85% Germany 10% Switzerland 5% US Property management in-house AI: 0% Real Assets: 0% Equities: 0% Bonds: 0% MM/Cash: 10% Real Estate (Core): 90% 85% Germany 10% Switzerland 5% US Property management in-house AI: 0% Real Assets: 0% ! Main Goals Asset Allocation Structure Strategy Expected ROI Case B Single Family Office 160 Mio. EUR AuM, 2 FTE Single Family Office 160 Mio. EUR AuM, 2 FTE 1.Continuous cash flows 2.Direct influence 1.Continuous cash flows 2.Direct influence > 10 % p.a. The opportunistic real estate guy History Entrepreneur, business sold 3 yrs ago Equities: 10% (German/European blue chips) Bonds: 10% (European corporate bonds) MM/Cash: 0% Real Estate: 70% (Germany, project development) AI (commodities): 10% Real Assets: 0% Equities: 10% (German/European blue chips) Bonds: 10% (European corporate bonds) MM/Cash: 0% Real Estate: 70% (Germany, project development) AI (commodities): 10% Real Assets: 0% ! Main Goals Asset Allocation Structure Strategy Expected ROI

13 © Family Office Consulting GmbH, AuM = Assets under Management, FTE = full time equivalents, ROI = Return on investment, MM = money market, AI = Alternative investments, PE = Private Equity Source: Research, Family Office Consulting GmbH Case C Multi Family Office 3,000 Mio. EUR AuM, 14 FTE Multi Family Office 3,000 Mio. EUR AuM, 14 FTE 1.Continuous cash flows/liquidity 2.Inflation protection 3.Preservation of capital 4.No direct influence 1.Continuous cash flows/liquidity 2.Inflation protection 3.Preservation of capital 4.No direct influence > 3% p.a. The traditional institutional way History Bank, around 40 clients Equities: 15% (Europe, Emerging markets) Bonds: 55% (German/European government and corporate bonds) MM/Cash: 15% Real Estate: 10% (Core, Germany) AI (commodities, gold): 3% Real Assets: 2% Equities: 15% (Europe, Emerging markets) Bonds: 55% (German/European government and corporate bonds) MM/Cash: 15% Real Estate: 10% (Core, Germany) AI (commodities, gold): 3% Real Assets: 2% ! Main Goals Asset Allocation Structure Strategy Expected ROI Case D History 2. generation, (business sold some 20 years ago) Achieving profit Main Goals Equities: 10% (German/European blue chips) Bonds: 5% (Corporate bonds) MM/Cash: 5% Real Estate: 35% (Core plus, Germany, Europe, US) AI 35% (PE, fund of funds, single funds): Real Assets (shipping): 10% Equities: 10% (German/European blue chips) Bonds: 5% (Corporate bonds) MM/Cash: 5% Real Estate: 35% (Core plus, Germany, Europe, US) AI 35% (PE, fund of funds, single funds): Real Assets (shipping): 10% ! Asset Allocation Single Family Office Started as virtual Family Office, over the years insourcing of the asset management expertise 800 Mio. EUR AuM, 9 FTE Single Family Office Started as virtual Family Office, over the years insourcing of the asset management expertise 800 Mio. EUR AuM, 9 FTE Structure More modern, typical real estate focus balanced with Private Equity Strategy > 15 % p.a. Expected ROI How family offices from Germany and Switzerland try to manage the balance between achieving profit and preserving wealth - examples (2/3)

14 © Family Office Consulting GmbH, AuM = Assets under Management, FTE = full time equivalents, ROI = Return on investment, MM = money market, AI = Alternative investments, PE = Private Equity Source: Research, Family Office Consulting GmbH Case E Single Family Office 2,000 Mio. EUR AuM, 29 FTE Single Family Office 2,000 Mio. EUR AuM, 29 FTE 1.Achieving profit 2.Low correlation 3.Direct influence 1.Achieving profit 2.Low correlation 3.Direct influence > 15% p.a. Almost the endowment way History 2. generation, inherited wealth Equities: 10% (Europe, US, Emerging markets) Bonds: 5% (Corporate bonds) MM/Cash: 5% Real Estate: 15% (Pan-Europe, US, Asia) AI: 60% (PE, fund of funds, single fund) Real Assets: 5% Equities: 10% (Europe, US, Emerging markets) Bonds: 5% (Corporate bonds) MM/Cash: 5% Real Estate: 15% (Pan-Europe, US, Asia) AI: 60% (PE, fund of funds, single fund) Real Assets: 5% ! Main Goals Asset Allocation Structure Strategy Expected ROI Case F History Successful, active entrepreneur 1.Managing wealth as professional as own company 2.Preservation and achieving wealth 3.Continuous cash flows 4.Direct influence 5.Low correlation 1.Managing wealth as professional as own company 2.Preservation and achieving wealth 3.Continuous cash flows 4.Direct influence 5.Low correlation Main Goals Equities (Global, US, emerging markets): 10% Bonds: 5% (Germany, emerging markets, corporate bonds) MM/Cash: 5% Real Estate: 15% (European, Asia, US/Canada, Australia, Latin America) AI: 55% (PE (40 FTE!), direct, fund of funds, single funds, first timers, commodities) Real Assets: 10% (Infrastructure non European) Equities (Global, US, emerging markets): 10% Bonds: 5% (Germany, emerging markets, corporate bonds) MM/Cash: 5% Real Estate: 15% (European, Asia, US/Canada, Australia, Latin America) AI: 55% (PE (40 FTE!), direct, fund of funds, single funds, first timers, commodities) Real Assets: 10% (Infrastructure non European) Asset Allocation Single Family Office 7,000 Mio. EUR AuM, 100 FTE Single Family Office 7,000 Mio. EUR AuM, 100 FTE Structure The successful entrepreneur Strategy 15 to 20% p.a. Expected ROI ! How family offices from Germany and Switzerland try to manage the balance between achieving profit and preserving wealth - examples (3/3)

15 © Family Office Consulting GmbH, Family Office Consulting - our services at a glance „Companion & Trusted Advisor“ for provider of family office services Quality audit Management consultancy Careful analysis and evaluation of the service offering within the competitive arena, based on a detailed catalogue of questions and criteria Our goal: To support our clients to get more efficient and successful „Devils advocate“ regarding: Strategy and business model, sales and customer relationship management, process optimization and efficiency increase „Companion & Trusted Advisor“ for wealthy families Coaching Coaching as a starting point to identify the family office services really needed Beauty-Contest Management consulting and project management with regard to the selection of the most suitable multi family office Implementation Management consulting and project management with regard to founding and setting up a family office Family Office Consulting – the only management consultancy for wealthy families and provider of family office services in the German speaking region! Investment Advisor Intermediary between family offices and investment managers (of real assets) with the offering of investment pearls fitting to the specific asset allocation needs of family offices

16 © Family Office Consulting GmbH, Should you have any quieries please do not hesitate to contact us! Family Office Consulting GmbH Zeil 81 D Frankfurt am Main Phone: +49 (69) Fax: +49 (69) Internet: Please contact: Dr. Marc Herzog - Managing Partner -


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