For some time, single-family offices have been co-investing with other single-family offices, mostly in private companies. With more and more single-family offices controlling ever-greater wealth, some of them are expanding this trend. Aside from other single-family offices and ultra-wealthy individuals, a small but growing number of them are teaming up with private equity funds, hedge funds, and a few have even co-investing with sovereign wealth funds.
Many single-family offices find club deals, for example, very appealing. They are usually co-investing with like-minded individuals; they often have a solid understanding of the industry; and they are able to leverage their expertise and contacts on behalf of the companies they are investing in. In fact, single-family offices co-investing opportunities are becoming increasingly institutionalized because of new technology platforms, events that are structured to promoting such coordination, and greater networking among them.
While some single-family offices have always coordinated with various types of institutional investors, the club deal experience seems to have prompted more of them to expand their co-investment efforts. Private equity funds and hedge funds are becoming seen as viable partners. In a relatively few situations, single-family offices are co-investing with sovereign wealth funds.
As a growing number of single-family offices are taking concerted actions to more strategically network with various types of institutional investors, they are periodically exposed to different types of investment opportunities. Their involvement in more selective events and affiliated networks is opening new doors for them.
According to Rick Flynn, managing partner of FFO Business Management & Family Office, "We're seeing a growing number of sophisticated family offices with substantial investable assets develop and leverage relationships with fund managers and even sovereigns in order to invest in large scale undertakings or exclusive situations. For example, there's a family office that is co-investing with some major banks and sovereign wealth funds in significant infrastructure projects across the globe. Also, by aligning with these other investors, family offices are able to see opportunities that are usually shown to very few investors."
As single-family offices become more professional, coupled with the vast fortunes that are creating new ones worldwide, they are going to make concerted efforts to search out preferential investment opportunities and partners. The likely result will be significant greater wealth creation.