BlackRock Inc., the world’s largest asset manager, has amplified efforts to serve the group by hosting summits with speakers including its chief executive officer, Larry Fink. The company has more than 20 people dedicated to working with them in the U.S. and has added staff in London, Hong Kong and Australia, said Brian Feurtado, who leads the group for the New York-based firm in the U.S.
“There’s been an explosion of family offices,” Feurtado said. “It’s a very, very vibrant and growing industry.”
Kayne Anderson Capital Advisors this month said it raised more than $1 billion for its latest real estate fund, with half the money from family offices and high-net worth investors.
Many Opportunities
There are an estimated 4,000 family offices globally, according to London-based researcher Campden Wealth -- with the latest addition a familiar face. Doug Ostrover, co-founder of Blackstone’s GSO Capital Partners unit, announced last week he’s leaving to start one of his own.
Heitin’s Windrose met with more than 400 investment managers last year and ultimately made just five investments, he said. McCarthy of Rockside passed on investing with KKR in part because the family he represents -- whom he declined to name -- can team with other wealthy investors to buy companies themselves.
Some private equity firms are enticing family offices to invest with the promise of co-investment opportunities. That’s when families invest alongside the firms rather than through a pooled vehicle, and are charged reduced or no fees. While it sounds good to investors who are more sensitive to costs, the offerings may not result in better returns, according to a 2015 study by professors Josh Lerner and Victoria Ivashina of Harvard Business School and Lily Fang of INSEAD.
Ramping Up
For Jim Burns, who leads KKR’s individual investor business, outreach is just ramping up. KKR hired Burns four years ago from Morgan Stanley’s private wealth management unit to build a team focused on sales to the wealthy. Burns hired two people in the past six months to reach more family offices in Europe and Latin America, he said.
“You really have to go door to door,” he said. “Most family offices don’t necessarily want to be found.”