Although it is an oversimplification to state that the main activity of a family office is managing investments and making investment decisions, it cannot be denied that the majority of single and multi-family offices have investment management as their main activity.
In most cases the financial services that are actually provided by a multi-family office do not extend beyond managing your private bank accounts and investment portfolios, but we have impeccable reputation and expertise in other types of investments, namely club deals, co-investing, impact investing and private equity. Below you will find a short definition of all the less common types of family office investment services that we specialise on.
Angel investing comes at the very beginning of an investment cycle. An angel investor provides the initial capital needed by entrepreneurs, often young ones, to make a start with their business, product of service –e.g. by providing extra cash for additional research, building a prototype etc. As angel investment is provided at the earliest stage of the business, the start-up phase, the sums involved are not always very large. It is also not uncommon that angel investment is provided by the entrepreneurs’immediate social circle.
Club deals are investments in private companies or other larger investment objects that are made jointly by two or more investors. Originally the term club deal was used primarily in the private equity industry when two or more private equity firms formed a syndicate to take over a private company which was too big for them to acquire alone.
Co-investments are investments made alongside a main professional investor. Co-investments can be made across a range of asset classes, such as private equity, real estate and hedge funds. Through a co-investment an investor can participate in investments that are normally not available to the general public.
Hedge funds are alternative investment vehicles whose main benefit lies in their flexibility. Hedge funds can invest in a wide variety of asset classes like fixed income, equities, currencies and commodities and can implement their trades through long and short positions, derivatives and/or leverage. The word hedge is therefore somewhat misleading as many hedge funds do not really hedge against all kinds of risks, but rather show a real positioning in relation to the markets. These characteristics enable hedge funds to play a key role in asset allocation, providing uncorrelated return drivers and reducing overall risk of a portfolio.
Impact investing are investments that are not only made to make financial return on your assets but also to have an ‘impact’. This means such investments have an additional goal often an environmental or a social one, which the investor tries to achieve. Contrary to philanthropy, when making an impact investment, one aims to at least get the invested sum back, preferable with a positive return.
The term speaks for itself: passion investments are investments that are not made because of their financial return, but primarily because of the ‘passion’ the investor feels for the particular object. Fortunately, enough for most wealthy families, the objects they are so passionate about often also bring decent return.
Private equity investments are investments that are made into existing operating companies (mostly mature ones) that are not quoted on the stock exchange. Private equity investments can be made in equity or by providing financing (private debt). Private equity investment firms often aim to acquire a controlling stake in the company they invest in. An investor can h=get exposure to private equity directly via private equity firms or via private equity funds, it is of course also possible for family offices to make direct private equity investments.
Real investments are direct (non-quoted) investments in tangible assets such as for example dairy farms and forests, which produce a direct return for the investors. Real investments are entirely privately owned, but professionally managed. Contrary to financial investments such as bonds and securities traded on the stock exchange, real investments are tangible, which enables investors to actually visit the location of their investments.
Venture capital is a direct investment (financing) made into a privately held start-up company in order to financially support it with its next level of growth. Venture capital investments are often made into internet and biotechnology related companies. Most venture capital is provided with the aim of receiving an above average investment return when the company is ultimately brought to the stock exchange via an IPO or taken over by an established name.