Family offices direct their efforts to making an impact
Larger family offices are taking on the private equity firms as they focus on investing directly.
In early September, Zurich-based Jacobs Holding, the investment firm established by Swiss billionaire Klaus Jacobs, bought UK private schools chain Cognita from private equity fund KKR and Bregal Investments for £2 billion.
This is the family office’s largest takeover to date, for which it fought off competition from other buyout firms understood to include CVC Capital Partners.
Jacobs Holdings’ sole beneficiary is the Jacobs Foundation, a charity focused on child development and learning.
The Cognita investment is an interesting move by the family office that is better known for its controlling stake in Barry Callebaut, the world’s largest cocoa manufacturer. It is also the latest example of a large family office taking on the private equity firms at their own game.
Sara Ferrari, UBS
“A few very large family offices have become proper institutional investors,” observes Sara Ferrari, head of UBS’s Global Family Office Group. “They are almost like competition to private equity firms in direct investment and only do direct investment with controlling stakes.”
Germany’s JAB Holding, a privately held company and investment arm of the wealthy Reimann family, has followed this strategy in the US, buying brands such as Panera Bread, Au Bon Pain and Krispy Kreme Doughnuts. The ultimate example of the family office turned institutional investor is Michael Dell.
Such firms will always be the exception. But the desire to invest more directly is growing across the market.
“There is a clear statement of intent towards direct investment,” says Ferrari. “Fifty percent of family offices plan to increase their exposure to this.”
UBS published its 2018 Global Family Office report in September, the result of online surveys with 311 family offices worldwide between February and May 2018.