Boom in family offices for small, medium businesses

Priyanka Pani Mumbai | Updated on April 29, 2014 Published on April 29, 2014

Advisory firms offer a range of services related to wealth management

Over 200 family offices (wealth advisory firms) have come up in the last couple of years, to serve the growth of tech-entrepreneurs and small and medium family businesses. Although these tech businesses create assets worth billions of dollars, the founders don’t have any expertise in managing their wealth — hence, the need for family offices.

Top ranking players in this business in India include Waterfield Advisors, Metias, Altamount and Acuitas Capital. The concept is new in India, though it is popular in developed countries such as the UK, the US, and Singapore.

As private advisors serving ultra-high net worth investors (UHNIs), such firms offer a range of services such as budgeting, insurance, wealth transfer, succession plans, legacy issues, tax services and philanthropy.

Chennai-based Metis focuses on mid-sized South Indian companies with revenues not less than Rs 350 crore. Currently, it has a team of 11 managing the wealth of about 50 families.

Such firms play the role of an extended family member and help entrepreneurs prepare for the next level of growth. And their services, they claim, are relatively less expensive. “The services provided by family offices cost 30-40 per cent less than the consultancy fees of the Big Four,” Balamurugan, co-founder, Metis, said.

Soumya Rajan, MD of three-year-old Waterfield Advisors, said there are over 1,000 HNI families in India sitting on a large pool of capital. Of these, about 400 have disposable assets of Rs 600 crore, and they need proper guidance on investments. Waterfield manages over 30 clients now, and plans to scale up to 50 this year.

With the number of UHNIs in India expected to double over the next 10 years, the opportunity for family offices is enormous, said Rajan. Her firm plans to set up five more offices in the next six months.

Amit Patni, former promoter of Patni Computers and a strategic investor in Waterfield Advisors along with his brother Arihant, said opportunities in the Indian market have increased and even farmers have made money selling real estate. Citing examples of increased merger and acquisition activity in tech startups — for example, Facebook buying Little Eyelabs or Redbus being acquired by Ibibo, Amit said the future looks bright for advisory firms.

Published on April 29, 2014
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