Direct deals by family offices reach record levels – research

Direct deals in private equity and real estate by family offices have reached record levels as the continent becomes one of the hottest regions to invest from these groups. 

According to research from Family Capital and PwC, direct deals from family investment groups totalled $227.6 billion in 2021, a record high, up from $152 billion in 2020 – a year affected hugely by the COVID-19 pandemic – and up from $218.2 billion in 2019. 

The research, entitled Family Office Deal Study 2022: Direct and real estate investments by family offices in Europe, also found that inbound investment in Europe from family offices has grown rapidly, with only 13% of total deals done by European family offices in 2021 falling outside of the continent. 

“Club deals” – transactions where a family office joins forces with other investors such as private equity or peers in the family office to make investments – have grown steadily in the last ten years, according to the research.

Despite the pause in their growth in 2021, some 308 of the family office-backed transactions during that year can be classified as club deals against 626 sole deals – meaning club deals accounted for 33% of the total. And while the number of sole deals has roughly doubled since 2012/2013, the number of club deals has increased by almost 25 times and reached its highest ever level in 2020.

Mega-deals 

Last year saw a step-change in the number of European megadeals – transactions valued at above $2.5bn – backed by family offices. Having bumped along at between 10 and 15 for the previous four years, the number of megadeals jumped to 20 last year, the highest for any year in the past decade. 

Large deals worth between $1bn and $2.5bn were also running at a healthy rate, recording their second-highest annual total after 2018, at 23. Medium-sized deals between $250m and $1bn were at a record level, at 67.

Analysis of deals by sector reveals that real estate has been the most active for investments by single-family offices over the past decade – with 1,698 transactions during that time – followed by 1,044 in the computer, electronics & optical products sector, and 582 in healthcare and biotech.

An analysis of the family offices that have backed the largest numbers of European-related transactions over the past decade reveals that they come from a diverse range of locations, with the top five all originating from different countries.

Grosvenor – the biggest investor 

The most active family office overall is the Duke of Westminster’s Grosvenor with 296 transactions, followed by a Swedish family backed Investment company at 190, Gary Fegel’s GMF Capital with 128, and Nemat Farrokhnia’s Imfarr at 115. Each of these offices has invested in more than 100 properties and/or companies within the past 10 years.

A breakdown of family office deals by target market shows that the United Kingdom has been the most popular overall in the period from 2012 to 2021, ranking first for direct investment transactions and second after the US for real estate deals.

For direct investments, the UK’s total of 895 transactions during the decade is followed by Germany with 580 and France with 407. The US ranks a fairly distant fourth with 278 transactions.

To download the report, please click here