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3 Family Office CIOs Discuss Transparency, Collaboration, Direct Investment

by trusted insight posted 5years ago 1172 views
Family Offices are shrouded in secrecy and operate outside the purview of the public and most regulation. What you may not know is family offices often collaborate with other family offices on investment opportunities. Here are three excerpts from exclusive Trusted Insight interviews on the subject of family office collaboration: 

Andrew Eberhart, CIO Of A Prestigious Single-Family Office
"Family members and their family offices, for good reason, are often intensely private. Their wealth and profile make them logical targets for financial crime and exposes them to personal security risk. That said, within the community, there is a great deal of collaboration and information sharing around investments, particularly direct deals. Most family offices have limited staffing and therefore develop a trusted network of others in the community to source, research and co-invest in such opportunities.
Families often get access to extraordinary investments as they may be in the industry in which they are investing or they are personally close with somebody who is in a deal or on the management team. Moreover, entrepreneurs and investment managers that are not yet ready for institutional capital often look to family offices for their initial funding, which creates an enviable, steady pipeline of first-look opportunities."

To view Trusted Insight’s full conversation with Mr. Eberhart, click here.

Robert Tobin, CIO At Persimmon Capital Partners, A Single-Family Office
"There's a group here in Baltimore called "The Baltimore Family Office Group," a collection of 40 to 50 family offices that meet on a quarterly basis. Sometimes there's a presentation involved from a third party on a particular subject matter of interest to the members. Other times, the meetings take an open-table format focused on a particular subject matter. As an example, we have had multiple discussions focused on direct equity investing.
There is much information sharing, and a trend toward direct investing in the family office world. I think that's being driven by a couple of items. 

Number one: Returns in the public market have been fairly stagnant. Also, fund investing adds an additional layer of expense to the G&A of a family office. So I think folks are starting to turn toward more direct investing.

Number two: I think there is an increased level of talent inside the family office sector, and the view of family offices is becoming a bit more mature and better understood. I think founders of businesses are seeing internal, institutional-quality talent at family offices. They are becoming more comfortable with the idea that bringing a family office into the cap table can be beneficial.

Number three: A family office can provide many positive attributes vis-à-vis traditional funds. For instance, we can hold assets for 25-30 years if that's the best thing to do for the company. We do not have the external forces of multiple outside LPs, which require liquidity in certain time frames. We also do not need to raise the next fund rather have a more permanent capital base. These facts can be pretty appealing to a founder of a business that wants to be sure that his partners' views, either short-term, mid-term or long-term are aligned with his or hers.
Those are some of the inside views on family office platforms and why it's an interesting asset class. To your point about sharing information, in this region at least, there are a fair amount of co-investment opportunities. The clubbing of private family resources and networks can be powerful. This facilitates the sharing of information, ideas and dealflow. I think there's a comfort level between a number of families in the area. We think about things in a similar fashion and have been able to partner together."

To view Trusted Insight’s full conversation with Mr. Tobin, click here.

Theodore Kokas, CIO At Roch Capital, A Single-Family Office
"You are absolutely correct about the opaqueness of the industry. That was probably one of the biggest challenges when I moved into this sector: networking in this space is so difficult. 

Every family office is different. One of my former associates at SEI runs a similar family office, a slightly larger one, also in the Philadelphia area. When I talked to him, prior to taking on this role, his advise was "If you've seen one family office, then you've seen one family office." Everybody does things a little differently. 

One of the interests I had when I first arrived here was starting to network in the space. Not so much in the investment side, but we were also building out our infrastructure, our reporting capability, our risk management capability. I wanted to get a sense of what best practices were in this space. So I joined a few groups and started networking with other family offices just to get a sense of what they were doing not necessarily in the investment side, but in the infrastructural side. That's where you saw a great deal of variance in terms of different families and family offices were approaching their logistical needs. That was the area of interest for me initially. 

Now that we've really developed the office and expanded our capabilities, now the interest is getting our name out there to other families that would potentially be interested in co-investing with us in private markets or had opportunities where they are looking for other family offices that have capital to deploy in the space. For us, it's raising our profile, given that we do have an interest in expanding our private capability." 

To view Trusted Insight’s full conversation with Mr. Tobin, click here.