US family offices shun Europe, emerging markets

US family office and private wealth professionals are heavily biased towards domestic private equity opportunities, according to research.

Only 6 percent of family offices identified Europe as having the most private equity opportunities over the next year, with a further 5 percent favouring emerging markets, a Schroder Adveq survey found. Just under 75 percent of respondents favoured the US, while 11 percent preferred developed-markets Asia.

“In today’s world access is an issue for everyone – the best funds can pick and choose their investors,” Chris Ivey, head of European private client practice at global investment consultant Cambridge Associates, told Private Equity International.

“You are more likely to be able to access a manager you’ve been able to meet in person and build a relationship with. A family office might have strategic relationship potential where they can offer the manager introductions or references in the future that could help a portfolio company, so that’s definitely a potential reason US family offices in the survey are looking closer to home.”

Venture capital was considered the most appealing strategy by 28 percent of respondents, with growth capital a close second at 26 percent. Turnaround and buyouts were less popular, with 12 percent of the vote respectively, while 18 percent saw opportunities in every strategy.

US general partners are increasingly looking outside their domestic market. International deals accounted for 50 percent of the $5.5 billion invested by US GPs in the PitchBook database during 2017, according to research from Maples Fund Services. This compares with just 28 percent of the $4 billion invested in 2016.

This increased focus is not without repercussions; the average European PE entry multiple is on track to overtake the US this year for the first time since 2013, according to figures from S&P Global Market Intelligence.

Schroder Adveq surveyed 112 family office and private wealth professionals at the Opal Family Office and Private Wealth Conference in Rhode Island. The asset manager – which invests in primary, secondaries and direct or co-investments – has $9.6 billion of PE assets under management, according to its website.