Asian family offices, HNWIs gravitate to alts with liquidity options
Asian family offices and wealthy investors are growing increasingly interested in private market investments although they want vehicles that offer them easy liquidity options, experts said.
“Family offices [in Asia] are starting to be interested in this [private markets] space,” Bill Ammons, partner and portfolio manager at AlbaCore Capital Group, told AsianInvestor.
He said this interest comes with a desire for “structures with some level of liquidity.”
AlbaCore Capital Group is a boutique European alternative credit manager that entered into a strategic partnership with Australia-headquartered First Sentier Investors in 2023.
AlbaCore Capital Group
Ammons said that high net worth individuals (HNWIs) and family offices often worry about how long-term alternative funds can be -- and when they can get their capital back.
That has encouraged alternative asset managers – whose traditional clients are institutional investors such as pension funds, sovereign wealth funds and insurers – to consider ways to make alternative asset investments more attractive for the wealth segment.
LIQUID NEEDS
One route has been to introduce open-ended alternative fund structures that allow wealthy investors to park money and pull out when they want, even as the project or fund continues to exist for 8-10 years or more.
“For our clients, the investments in alternative assets are primarily via funds tailored for wealth meeting varying liquidity preferences, return preferences and risk appetite,” Jeremy Hall, managing director of Brookfield Oaktree Wealth Solutions, told AsianInvestor.
“The ultra-high net worth individuals can access direct investments but for the vast majority of the wealth segment, it would be fund-based investments.”
Brookfield Oaktree
Wealth Solutions
Brookfield Oaktree Wealth Solutions in 2023 launched its dedicated flagship infrastructure fund designed specifically for the wealth investors.
It offered access to Brookfield’s long standing infrastructure expertise, along with access to mission-critical infrastructure assets around the world.
“It was launched first in Asia Pacific and attracted overwhelming support from the region’s investors, a strong indication that individual investors were looking for a vehicle to access the asset class that addressed many of the historical challenges that had made it difficult for wealth investors to access, such as queues and capital calls,” said Hall.
“We have raised well over $1.6 billion of HNWI capital out of Asia over the past 17 months alone,” he added.
The wealth manager has made over 25 launches across APAC in the last three years across semi liquids, public securities and private funds.
That wealthy investors need to be wooed by fund structures that offer easy-in, easy-out options was also emphasised by Sedek Jantan from Malaysia’s UOB Kay Hian Advisors recently.
DIVERSIFICATION AT PLAY
AsianInvestor has previously reported that family offices are very interested in alternatives, and exploring different assets classes outside of the traditional choices of real estate and private equity.
About 87% of HNWIs in Asia Pacific who have already invested in alternatives are open to investing further in such assets, a recent survey from Brookfield Oaktree Wealth Solutions in Asia Pacific also noted.
About 83% of those who still had not started investing were open to investing if they understood the available options, the survey said.
They survey covered HNWI investors in Hong Kong, Singapore and Taiwan with at least $2.5 million in household investable assets.
Some family offices have expressed interest in private credit, which AsianInvestor has reported recently.
“Many of them already have private equity allocations and are looking at an asset that has more downside protection,” AlbaCore’s Ammons said.
Direct lending strategies are seeing quite a lot of interest, he said, noting that senior secured debt volume has picked up.
With open-ended structures, “investments will typically be 80% private credit and 20% more liquid assets such as leveraged loans or even bonds – something that they can sell to meet redemptions as they come in,” Ammons added.
Still, given that the underlying assets in private market funds exhibit varying degrees of illiquidity, he said the question remains, "how much liquidity can you provide against assets that are fundamentally illiquid to less liquid?"
He believes interest in private credit will continue, among both traditional institutional investors and family offices, as “interest rates will probably stay higher for longer, maybe longer than people expect.”