Family offices direct their efforts to making an impact


Louise Bowman
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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. 

It revealed that the average investment performance of family offices globally increased nearly twofold in 2017 to a total average return of 15.5% – more than twice the 7% average in 2016. This was largely thanks to a focus on equities – both public and private. Many firms now want to focus their allocations to impact investing.

The report shows that more than one-third of family offices already undertake impact investing – a rise of 4.2 percentage points over the year – and 39% expect that the next generation will increase their allocations when they take over.  

I still think that there is a stigma around returns and that the research isn’t there yet to be able to build a full portfolio of sustainable investments 
 - Sara Ferrari, UBS

With nearly two thirds of next generation heirs expected to take over within the next 10 to15 years, that could mean a huge increase in allocation to impact investing in the near future. 

The most common forms of family office impact investing are in clean energy, water, gender equality and healthcare. 

“We have seen a clear indication that sustainable investments are top of the agenda, but we do not yet have any specific data on how much of portfolio impact investment accounts for,” Ferrari tells Euromoney. 

This is a remarkable commitment to a strategy that has yet to prove itself. 

“We don’t yet have statistics for sustainable investments as an asset class or what percentage of private equity returns really come from sustainable investments,” Ferrari points out. “This is still a relatively limited percentage of investments, so the impact on returns is still relatively meaningless. To say that impact investment is delivering compelling financial returns is still a bit of an abstract, theoretical statement. This is still to be proved.”

Despite this, 54% of family offices that took part in the survey reported that they plan to increase their allocation to impact investing over the next 12 months, while 18% will not and 28% are undecided. 

“I still think that there is a stigma around returns and that the research isn’t there yet to be able to build a full portfolio of sustainable investments,” one North American family office executive told UBS. “At the end of the day you want to do good, but you also want to perform.”


Private equity is the route through which most family offices access impact investments. The indications are, therefore, that there could be an uptick in family office allocation to private equity as ESG opportunities move up the agenda at these firms. 

“Whether overall PE allocation will increase because of impact investing or will remain stable will depend on relative performance of other asset classes,” Ferrari points out. 

“We will have to see if the deal opportunities that emerge from impact investing will be able to deliver returns in line with or better than existing PE returns,” she adds. “It does take time for the actual realisation of PE returns, so any impact on performance will only be seen a few years down the road.”

In the meantime, the focus on equities has clearly paid off (although Ferrari cautions: “The return is a nice headline number, but these are theoretical returns on an average portfolio. It is as meaningful as an average can be”). 

“It will be interesting to see final allocation to developing equities [this year],” says Ferrari. “Last year, this beat all other asset classes, but for the first six months of this year the picture looks very different.”

Family offices have boosted their allocations to real estate, which is the third most popular asset class and now represents 17% of the average portfolio allocation, while hedge fund allocations continue to fall as they have done since at least 2015. 

In 2017, allocations to hedge funds fell by 3.2 percentage points, and they now account for just 5.7% of the average family office portfolio.