Insights
Direct Investment driven by continuing strong tailwind – Richard Hill
Wealthy families increasing their allocation to private investment opportunities
Wealthy families’ interest in direct investment continues to grow, according to Richard Hill, CEO of the Corporate Finance and Direct Investments at Stonehage Fleming. “We see a structural tailwind to direct investing now. We work with many entrepreneurial clients. They have been successful in business and have strong views as to how they want to deploy their capital. Direct investments are increasingly on the table. It’s a theme which has continued to develop over the last five years,” he told guests this week at a round table, in conversation with Dave Sherwood, Founder and CEO of education technology company, BibliU, one of Richard’s team’s portfolio companies.
For the world’s family offices, while strategic asset allocation has remained relatively stable over the last three years, the average allocation to private markets has risen steadily from 16% in 2019 to 23% in 2021. Direct investments in particular are up from 9% in 2019, to 10% and 13% in 2020 and 2021 respectively. (UBS Global Family office Report 2022).
It is a trend that shows no sign of abating, according to Richard. “Research is estimating private markets doubling in size between now and 2027. These are big numbers. Many of our clients are invested in private equity, generally, and I think it isn’t unreasonable to assume that allocations will increase to hit those sorts of numbers over five years.”
Having the size and scope in a family office is key to finding the right opportunities for clients, said Richard. “Stonehage Fleming now looks after a global client base with offices in 11 countries and over 900 employees. We manage about £15bn on our asset management platform and about four times that on our advisory platform including the trust and fiduciary business. When working with global international clients, you are dealing with increasing complexity around jurisdiction, regulation, tax, investments and every aspect of wealthy families’ lives. Having that scale and global presence is a real differentiator.”