India’s vibrant startup sector is fuelling the growth of Indian family offices, as wealthy families set up investment groups to channel spare capital into the country’s dynamic tech sector.
Aditya Gadge, CEO of the Association of International Wealth Management of India, says: “A big impetus to set up a family office in India is the desire for many families to take a minority or even majority stakes in startups,” he says. “Wealthy families have witnessed some investors making a 10-fold return on their capital through investing in a start-up. Many want a piece of the action.”
India’s tech sector is thought to be the second biggest in the world in terms of revenue generated. It accounts for more than 25% of India’s exports and is centred on Bangalore, India’s so-called Silicon Valley. Two of the country’s most prominent family offices came out of the country's tech industry - Catamaran Ventures, the Bangalore-based family office of Narayana Murthy, the co-founder of India’s most successful tech business, Infosys; and Innovations Investment Management India, also based in Bangalore and set up by one of the other co-founders of Infosys, S. D. Shibulal.
Gadge says that the advisory sector focused on family offices and ultra-high net worth individuals are also flourishing, which is helping the sector to grow as well. “Within the space of just three years, the family office sector has grown from virtually an unheard concept in India to today where the sector is booming.”
Gadge reckons there are at least 120 single-family offices in India. His organisation is hosting its fourth annual India family office conference in September. The AIWMI also plans to launch a first ever benchmark study on the Indian family office market later this year.
India has one of the biggest family business sectors in the world in terms of its contribution to the nation’s GDP, and this is another reason behind the growth in the family office market.
But there are some very big family businesses in the country that have to date not joined the trend to set up a family office. One head of one of the country’s biggest family businesses told Family Capital earlier this year that his family had no desire to set up a family office. “All our spare capital goes into the business,” he said. "We have no desire to set up a family office."