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How heirs to the ultra-rich manage wealth through family offices focused on startups
Benaifer Malandkar

Poet Alfred, Lord Tennyson's oft-quoted line "The old order changeth, yielding place to new" perfectly encapsulates the change seen in the way ultra high-net-worth individuals (UHNIs) in India manage their wealth.

With many scions of the ultra-high-net-worth families coming of age, there has been a distinct shift in how these young leaders grow and preserve wealth compared with the older generations. While earlier, UHNIs were more focused on expanding their core businesses and investing their wealth in traditional assets such as equity, debt or real estate, the priorities of the younger generations are starkly different. Rather than limiting their options to the family business, what has caught their fancy is investing in start-ups and nurturing entrepreneurs. Philanthropy is also high on their agenda.

The growth of family offices in India has been one of the key catalysts for this change. The family office, an investment model first conceptualised in the nineteenth century by the Rockefeller family in the US, has become popular for efficient allocation and protection of wealth by the ultra-rich in India today. And this has been prompted by the need to operate compliantly under ever-increasing complex regulations, the need to consolidate businesses, initiate succession planning and identify beneficiaries.

With the advent of family offices, investment decisions have become more goal-based and structured rather than being ad hoc, as was the case earlier. The family offices have also played an important role in popularising unconventional investment options. The fact that many of the young leaders have received education abroad and have worked overseas, has also helped to broaden their horizon. For many, investment decisions are often intertwined with their passion. Hence, today, there is a much greater appetite for newer and riskier investment options. Most of the young leaders are keen to nurture new entrepreneurs, invest in social causes and in philanthropy.

It was no surprise, therefore, when the daughters of billionaire banker Rana Kapoor started investing in start-ups to grow their wealth rather than follow their father's footsteps. Their The Three Sisters: Institutional Office has identified education, tourism, family entertainment centres and agri-logistics as sectors where the family's personal wealth will be deployed.

Similarly, Yash Kela, the nephew of market veteran Madhusudan Kela, founded family office Singularity Ventures, which has invested in new-age companies across financial services, consumer brands, telecom networks and precision manufacturing. Its portfolio companies include Insurify, Keto, Market Simplified and others.

Gaurav Burman, a director of Dabur International and a fifth-generation member of the Dabur family, runs Elephant Capital, a private equity business focused on the Indian market and India-related opportunities. Operating from London and Delhi, it has invested in the iconic magazine for children, Amar Chitra Katha.

Anirudh Damani, another scion of a family of entrepreneurs, which has a finger in several pies including hospitality, real estate, and stock broking, convinced his family to become angel investors. He roped in his father, uncle, and cousins to be a part of the family office, and through his Artha India Ventures, invested in start-ups like OYO, BookMyCab, and Vista Rooms.

This trend among the UHNIs is hard to miss. While it has created opportunities for many entrepreneurs to lend wings to their dreams, at the same time, it has created alternative investment options for UHNIs, helping them to grow and preserve their wealth in a manner that is closer to their aspirations.

Benaifer Malandkar is chief investment officer of RAAY Global Investments, the family office of Amit Patni Group. Views are personal.

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