Sunday, November 2, 2014

Foreign Family Offices Are Opening U.S. Branches

From Bloomberg:

Richest Are Bullish on U.S. as Family Offices Open Outposts
As the U.S. powers the global economic expansion in its fifth year, the world’s rich are counting on American companies to help increase their fortunes.

At least a dozen family offices, with fortunes made in Europe, Asia and South America, have opened U.S. outposts in the past two years or are making direct investments in corporations from Silicon Valley to the East Coast. Their view is that the Federal Reserve’s aggressive monetary easing, a shale oil boom that’s lowered energy costs, and improving corporate balance sheets give the world’s largest economy an edge over other regions.

Peca Ltd., a London-based firm started in the 1990s by a family that made its wealth mainly in financial services, has made about two-thirds of its private-equity and venture capital investments in the U.S. while reducing investments in Europe, said Anselm Adams, who oversees the firm’s alternative investments. A German family that founded an automotive company opened an investment office in New York this year to find deals in the automobile, textile or luxury industries, according to a person familiar with the matter, who asked for anonymity citing a lack of authorization to discuss the firm.

“They are looking for diversification and more exposure to the U.S.,” Patrick McCloskey, managing partner at Aeterna Capital Partners, said of the firms. “Many family groups are trying to manufacture yield in a very low-interest-rate environment and are looking for unique and customized ways to do so.”

McCloskey’s firm last year opened a New York office for a rich European family looking for deals in the U.S. In September, he helped his client finance a video-distribution company with a loan that pays the London interbank offered rate plus as much as 11 percent.
Average family office assets under management globally and total family net worth.
Average family office assets under management globally and total family net worth. 
Family offices manage $4 trillion in assets globally, about 55 percent of which is based outside of North America, according to a 2014 study by London-based researcher Campden Wealth. Affluence has grown fastest since 2013 in the U.K., Korea and Denmark, according to a report this month by Credit Suisse Group AG....MORE