India family office CIO leads efforts to build peer network for investments

A boom in single family offices in India has led one veteran chief investment officer to set up a peer network to help wealthy families navigate everything from setting up an office to investing while separating business and family fortunes.

“The aim was to have the network help families with anything they needed – from vetting investment ideas to advice on setting up and managing a family office,” Jai Rupani, principal and chief investment officer of the Dinesh Hinduja family office, told AsianInvestor.

Rupani is also founder of the single family office network called Aikya Connect.

The network was launched about two years ago and is a by-invite only investment network for senior investment professionals of single-family offices. 

“Today, we have 50+ family offices as part of this network with a cumulative investable corpus of about $25 billion,” he said, adding that the net worth of those families is roughly about $100 billion plus.

The Mumbai-based family office manages the personal wealth of Dinesh Hinduja, one of the co-founders of Gokaldas Lifestyle, whose precursor was Gokaldas Exports, India's largest garment exporter. 

Rupani oversees investments across all investment classes, both in public and private markets.

'ANYTHING THEY NEED'

Aikya, which means unity in Sanskrit, aims to drive connections that build intelligence, provide access to peer perspectives and encourage sharing insights among members in a private and confidential setting.

“The real challenge is finding a peer group that will talk to you as a peer and be supportive, which is why I founded the family office network,” Rupani said, noting that CIOs at family offices tend to otherwise speak to people such as asset managers, who are primarily trying to sell products.

The network conducts online and offline events – about 20 a year – to benefit members.

“I wanted it to be non-commercial yet very exclusive and by invitation only. We structured it such that it could pay for the 7-10 employees it would have to deliver exemplary forums, knowledge sessions and member engagement.”

Most of the single-family offices in the network are based in India or have Indian roots. “We have a few from Dubai, the US, the UK and Singapore too,” said Rupani.

While the India-based single-family offices actively invest domestically, the international ones have also invested in the country via different channels, including funds.

Rupani said his extensive work experiences and travels have taught him that the best advice comes from one-on-one peer conversations. 

“Yes, it’s great to have high-level thoughts from top leaders at a conference, but nothing beats one-on-ones. It’s still early days for India’s family offices. However, the single-family office network is growing rapidly. The desire to be global Indian and not just a domestic investment firm is fuelling this growth,” he said.

GROWTH SURGE

There are about 300 single family offices in India with an average net worth of $100 million, according to some estimates.

India’s ultra-high net worth individual population (individuals with $30 million and more) is also expected to surge by nearly 60% in the next five years, according to a Knight Frank report in May.

The country will have about 19,100 UHNWIs by 2027, up from 12,500 at the end of 2022.

Some wealthy families are also eyeing setting up offices in overseas jurisdictions such as Singapore.

There are multiple things at play helping along this growth in family offices.

For a start, the Indian economy has grown into a powerhouse over the past two decades, with phenomenal growth in terms of GDP and exports. 

As economic growth happened, private equity entered and fuelled that growth further. Several family businesses were bought by private equity, and they (the families) got money to grow further. So that is one phase that India is going through,” said Rupani.

India is already estimated to have overtaken China in terms of population and forecast to be one of the fastest growing economies in 2023, according to the International Monetary Fund.

TRANSITION, PRESERVATION

Several wealthy families in India are also undergoing transition, moving from the first generation to the next.

Once founders of big business empires reach the 70-75 year-mark, they start to think about family transition, he noted.

"Sometimes the family patriarch finds that the children, who are already 45 or so, don't want to take over the family business; they don't want to take over a manufacturing business with 7,000 employees. That often means opportunities for private equity, exit plays, and potentially IPOs (for families to exit the business).”

In addition, some business founders are starting to think about carving out a corpus just for the family nest egg, as a way to preserve and grow their fortunes.

“They [founders] have seen industries being wiped out by technology and new competitors and that is a real threat,” said Rupani. 

Some businesses were wiped out by Chinese competition. For example, Chinese products came in, and the landed costs of products were 40% lower than the cost of production in India.

"That can wipe out an Indian manufacturer and a lifetime of business. If a founder didn't have a family nest egg, that could become a fatal mistake.

Such concerns have also led to the creation of family offices to manage personal wealth.

The fact remains that many of these families and founders have little idea of how to set up or manage a family office -- and that is where Rupani sees Aikya Connect’s value.

“We know this is a long game – maybe a 10-year game. But by the end of 10 years, I know there will be a big name for this [network] and there is a lot we can do together as a community,” he said.

For Rupani, Aikya Connect is more about passion than profit. “ It’s very fulfilling for me to be able to contribute towards building a powerful ecosystem [for family offices]”.