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European family offices increasing PE allocation

New report shows average allocation is around a quarter of their portfolio

European family offices are increasing their allocation to private equity, allocating on average around a quarter of their portfolio to the asset class, compared to less than 15 percent five years ago, according to a new report from placement agent and secondaries advisor Cebile Capital.

London-based Cebile reviewed the 300 family offices with which it works on a primary and secondary basis in private equity both in the UK and in continental Europe, as well as using publicly available data from private equity institutions to compile the report.

The area of most interest to family offices in Europe is venture capital, with 50 percent of those surveyed stating a preference for venture funds. This compares to 40 percent for other European institutions.

Buyout was the next popular, with 41 percent stating a preference for this type of fund, followed by growth, for which 35 percent stated a preference. Only eight percent said they had a preference for mezzanine funds.

European family offices are also cautious when it comes to newly-formed teams, with only 11 percent saying they would consider investing in first time funds. In contrast, 42 percent of European institutional investors said they would consider committing to such vehicles.

The family offices surveyed showed a clear preference for investing in Europe, with 66 percent willing to invest there. Around a third would consider investing in North America or Asia, six percent would consider Latin America and three percent would consider Africa.

IT was the clear sector winner, with 24 percent of European family offices said they would be willing to invest in the sector. Healthcare and telecoms and media were also popular, with 19 percent and 18 percent respectively responding that they would be willing to back these sectors either through a fund or through direct private equity investments. Food and agriculture is the sector least in demand, with only five percent willing to invest in such companies.

Family offices are playing an ever more active role in private equity. A survey from montana capital partners (mcp) and Private Equity International published last December found that a third of family offices and foundations intended to increase their private equity allocation in the next 12 months, PEI reported previously.

The second Annual Family Office and Foundation Private Equity Survey, which questioned 64 family offices and foundations about their strategies and opinions, found that almost half of those surveyed said they had increased their allocation to private equity in the preceding 12 months. Just 13 percent saying they had decreased their allocation.

In the preceding 12 months 44 percent of respondents increased their number of manager relationships, and around a third intend to continue to do so over the next year. Seventy-nine percent of those surveyed are active in the secondary market in some capacity, with 46 percent already invested in secondary funds.