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Survey predicts growing synergy between family offices and private equity

A new survey has highlighted the increasingly important role of family offices to the private equity industry. More than two thirds (69%) of family offices surveyed by alternative assets research and consultancy group Preqin are considering forging new relationships with GPs this year.

The track record of a GP is also extremely important to family offices: 82% of respondents said this was a key quality they look for in fund managers. However, 84% of family offices are satisfied with the current fund terms and conditions they are offered – this compares with just 43% of institutional investors who are satisfied.

The report also showed that family offices are happy with the returns they are getting. Nineteen percent of family offices feel their private equity investments have exceeded their expectations compared to just 7% of all institutional investors, while 65% said such investments met their expectations.

"Family offices show a good deal of flexibility and opportunism with regards to making new investments when compared with other investor types which are bound by stricter rules governing investments," said Preqin's Helen Kenyon. "We expect that family offices will grow in importance over the course of the next few years, and we are already seeing an increased number of requests for information on this generally reclusive set of investors from our clients on the road seeking capital for new vehicles." 

Many family offices have an historic affiliation with private equity, but an article in the latest edition of Campden FO reveals many remain cautious about an industry that has suffered a barren period over the last 18 months. Scott Earthy, MD of a US-based single family office, said despite his commitment to private equity, there are clear issues over managing liquidity in the current climate.

In the UK, David D Murray, MD of a Scotland-based single family office, told Campden FO that he will not generally invest in traditional private equity funds, preferring instead to stick to investments where the family can maintain "a significant element of control." 

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