Data from Preqin reveals a notable trend among family offices globally, indicating a slowdown in their allocation to private equity over the past two years. The median allocation dropped from 17% at the end of December 2022 to 16% by the end of December 2023, following a peak of 20% in both 2020 and 2021. This shift reflects a broader adjustment away from adding more illiquid assets to portfolios, according to William Marr, Senior Managing Director of Welton Investment Partners LLC.
Marr highlights a significant wave of investments in illiquid assets between 2010 and 2020, including private equity, private debt, and private real estate. Many family offices have now reached their allocation limit for illiquid investments, prompting a reevaluation of investment strategies. However, Marr notes specific segments like private debt and private equity secondaries continue to witness substantial demand from family offices.
In line with this trend, the KKR & Co. Inc. Family Capital Survey 2023 indicates that family office chief investment officers intend to increase exposure to alternative assets, particularly private credit, infrastructure, and private equity, in 2024. Similarly, Matthew Weatherley-White, CIO of Align Impact LLC, notes a continued desire among the firm's clients to enhance exposure to private equity and private credit.
Larger private equity firms are actively targeting private wealth to expand their investor base. Notable firms like KKR and Blackstone Inc. have launched strategies tailored for wealthy individual investors and family offices. KKR has raised a significant portion of its assets under management from non-institutional private wealth, amounting to approximately $75 billion as of December 31, 2023. Blackstone sees private wealth as an extensive opportunity, evidenced by the successful first close of its private equity fund for individual investors, Blackstone Private Equity Strategies Fund LP, in January 2024.
In terms of wealth managers with substantial family office allocations to private equity, Vivaldi Capital Management LP leads the list with $3.13 billion as of March 19, 2024. Other prominent managers include Align Impact, CoastEdge Partners LLC, Munich Private Equity AG, and BNY Mellon Wealth Management, each with over $1 billion in family office allocations to private equity.
Amidst evolving market dynamics, S&P Global Market Intelligence and Validatis have collaborated on a podcast series addressing trends and challenges within the financial services industry. The series sheds light on the importance of effective client lifecycle management programs to enhance efficiency in know-your-customer (KYC) and onboarding processes, emphasizing the role of Managed Services in ensuring regulatory compliance.
Sam Jarrett, Regulatory Compliance Product Specialist at S&P Global Market Intelligence, discusses how the financial services industry is adapting to client lifecycle requirements amidst a complex regulatory landscape and technological advancements, providing valuable insights into navigating regulatory challenges effectively.
