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Gulf family offices shifting capital to family businesses

Ultra-high net worth individuals and family offices in the Gulf Cooperation Council countries reckon investing more in their family business provides the “the best opportunity” for good returns.

Ultra-high net worth individuals and family offices in the Gulf Cooperation Council countries reckon investing more in their family business provides the “the best opportunity” for good returns.

That’s one of the findings of the third annual Middle East Management Study by investment company Invesco, which said strong returns, a need for corporate funding and “the attraction of corporate opportunities” were driving capital to corporate assets rather than personal accounts.

Based on interviews with more than 100 UHNW individuals and family offices based in the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait and Oman, the survey said 40% of family offices were moving capital towards their own family businesses.

“These results imply long-term requirements to segregate personal and corporate assets, for such things as succession planning or diversification, are outweighed by the ongoing short-term priorities around business funding requirements and potential returns,” said Nick Tolchard, head of Invesco Middle East, in a statement.

Investing in their own companies was considered more important among single family offices than multi family offices in the GCC. While a need for funding and returns drove the shift in capital in SFOs, succession planning was the main factor causing a change in investment pattern among MFOs, said the study.

“A significant proportion of UHNW individuals currently view investing in the family business as the best opportunity available to them. This may well be true in some cases, but the need for diversification is also important, as is the communication of alternative investment options to this community,” added Tolchard.

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