Family Office

Single-Family Offices - What Do They Own?

Alastair Graham London 19 October 2021

Single-Family Offices - What Do They Own?

The author of this piece, who has access to a comprehensive database of what SFOs invest in, points to a number of eye-catching examples.

The following article comes from Alastair Graham, founder and managing director of Highworth Research, an organisation tracking many of the world’s single-family offices. This group provides highly detailed analyses of family office activities and investment patterns. 

In the following analysis, Graham examines the sectors family offices are investing in and the associated trends. Again, this is the kind of exceptional insight one cannot get elsewhere. 

The Family Offices Database produced by Highworth Research in association with WealthBriefing now includes detailed profiles of 1,500 single family offices globally. The online database provides one of the most comprehensive sources available for understanding the statistics behind single family offices’ allocation to particular asset classes. 

Out of the 1,500 family offices currently on the Family Office Database, 1,426 allocate to alternatives. Among the major alternatives, the most popular not surprisingly is real estate, with 1,090 SFOs allocating to this asset. 

After real estate the next most popular alternatives are venture capital and private equity, with 755 of the 1,500 SFOs investing in VC, of which 608 invest directly, 540 through funds, and most through both.

The Family Office Database also shows that 660 SFOs invest in private equity, of which 452 invest directly, 440 through funds, and most through both.

Which are the top dozen most favoured business sectors in which single family offices invest directly via venture capital and private equity?

Technology and healthcare lead the way 
Here is the ranking of single family offices’ preferred business sectors, drawn from the direct VC and PE investment histories of the 1,500 SFOs on the Highworth Database.

Technology – all categories: 566; 
Healthcare – all categories: 334; 
Financial services, including fintech: 238; 
Diverse – multi-sector: 214; 
Real estate: 212; 
Consumer products: 190; 
Food and beverage: 181; 
Energy: 178; 
Media: 143; 
Consumer services: 130; and 
Hospitality: 110.

If we drill down into the numbers of SFOs investing via PE or VC into some of the fashionable niche sectors, here are the stats, again drawn from the base of 1,500 SFOs: 

Medtech: 124; 
Biotech: 120; 
Renewable energy: 115; 
E-commerce: 114; 
Cleantech: 81; 
Sports business: 71; 
Environmental protection: 58; 
Artificial intelligence: 49; 
Logistics: 48; and 
Shipping: 34.

Are the sectors currently favoured by single family offices for their PE and VC investments likely to change much in the next couple of years? Post pandemic, technology and healthcare are likely to continue leading the pack for the foreseeable future. Possibly hospitality will reduce in appeal, again as a result of the pandemic. 

Investment risk in biotech: the winners are very few
The most favoured niche sectors all seem likely to continue to grow in appeal, driven by the political and social pressures to focus on public health, climate change, and supply chain constraints. However, for family offices seeking to invest in the two business sectors currently in the headlines, healthcare at the highest level of biotech research and development, and logistics, there are notable differences in risk.

If there are several hundred single family offices on the Highworth database investing in healthcare, and particularly biotech, at present, the risk level is such that less than a handful have enjoyed significant returns and only one, phenomenal returns. 

Athos Service is the family office of the brothers Andreas and Thomas Strüngmann, both very seasoned, highly astute, and very patient VC and private equity investors in the biotech sector. In 2008 they first invested in a fledgling biotech company called BionTech. Athos Service, through its vehicle ATImpf, today holds a 47.55 per cent stake in BionTech, the company responsible for the Pfizer/BionTech COVID vaccine.

On 14 October BionTech’s market cap on Nasdaq was $60.59 billion, valuing the Athos stake at $28.81 billion. There are few, if any, more successful investments by a family office in a single company, ever. 

Logistics – a neglected investment sector, until now
Investment in logistics and shipping on the other hand has attracted less than 50 single family offices on the Highworth Database. Up till now it could be regarded as a Cinderella sector, where the returns were comparatively pedestrian but the risks were low. 

However, now is the time when logistics can go to the ball. The current global supply chain crisis means that any family office owning warehouse assets or shipping transportation is looking at a revenue curve heading rapidly upwards.

Seatankers Management Company is the London-based family investment company of Norwegian shipping magnate John Fredriksen. In the early phase of the pandemic in April 2020 the aggregate value of Fredriksen’s listed shipping company portfolio was $1.26 billion. On 14 October 2021, the portfolio was valued at $2.29 billion. The reason? Three of his listed holdings are in bulk commodity carriers and in LNG shipping assets – nice to have at a time of crisis in global commodity and gas supply.

Ceres Monaco, the family office of Peter Livanos, has significant private shipping assets but his listed holdings include Gaslog Ltd, an owner of LNG carriers. Eight months ago on 22 February Gaslog’s market cap was $558 million. By 14 October 2021, this had grown to $1.38 billion. 

Family offices owning listed logistics assets are thin on the ground but there are some examples. One is Delton AG, a family investment company owned by BMW heir Stefan Quandt. Delton’s subsidiary Delton Logistics holds an 87.1 per cent stake in Luxembourg-based Logwin AG, a provider of air and sea-freight services. In April 2014 Logwin’s market cap was €162 million ($187.8 million). In June 2019 it was €432 million. On 14 October 2021 it was €732 million. 

It is more common to find family offices owning logistics real estate privately. One such is Delin Capital, the UK-based family office of Igor Linshits, originally from Georgia and now a UK citizen. Delin made a far-sighted investment commitment to logistics real estate in 2005 and now holds a portfolio of 37 distribution centres in the UK and Continental Europe covering nearly 923,000 square metres, with a further 164,000 square metres under development. 

It is certain that family offices will now be looking at investment in the logistics sector with a fresh eye.

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