Family offices are increasingly turning to private equity (PE) as a central investment pillar, especially through direct investments, a new report has found.
Family offices are proactively pursuing niche opportunities, co-investments, and innovative structures such as holding companies and evergreen funds, with nearly half of the respondents planning to increase allocations to private equity transactions over the next two years, more than double their expected allocation to other asset classes, according to the inaugural Kharis Capital & Bastiat survey.
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The report from Kharis Capital, a consumer-focused private equity firm and Bastiat Partner, revealed that roughly 40 per cent of family offices plan to increase their allocations to PE by 2026, indicating PE’s growing prominence as a preferred asset class.
The survey of 75 global family offices also found they are increasingly adopting new strategies to support their push into private markets, exploring tactics like direct investment and creative deal restructuring and are taking a look at top-of-mind concerns around topics like deal flow, networking and employing investment committees.
By focusing on diversification, control, and targeted returns, family offices are not only changing their strategies but are influencing broader private markets, the report highlighted.
‘Core asset classes, even many “alternatives”, are deeply competitive and only becoming more so. Those core asset classes serve a purpose, but for our marginal investment dollar we prefer to methodically add to our portfolio of private, non-correlated assets,’ Matt Cornue, chief investment officer at The Horowitz Group, told the report’s authors.
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Key findings from the report include:
Quality deal flow & relationship building
The report found 20 per cent viewed identifying quality deal flow as a primary concern, underscoring the need for effective sourcing strategies and robust networks.
Sourcing quality deal flow remained a top priority, underscoring the value of strong, enduring relationships. Unlike institutional investors, family offices benefit from extensive networks with other family offices and private equity firms, creating a deal-sourcing advantage. This network-centric approach is vital to accessing high-quality investments, fostering co-investment opportunities, and enabling collaboration on complex, bespoke deals.
New era of growth in direct private investments
Direct investments are especially attractive, with 50 per cent of family offices surveyed indicating plans to increase their exposure. This move reflects a broader shift towards autonomy and alignment of interests, as direct investments allow family offices to exercise more control, avoid intermediary fees, and build customised portfolios.
Evergreen funds and holding companies
Family offices are also turning to alternative structures that better support their long-term investment horizons, such as evergreen funds and holding companies.
Increased participation in re-capitalisations and pay-to-play dynamics
As capital markets tighten, family offices are finding new opportunities through re-capitalisations, the report said. Many companies with sound business fundamentals are now facing capital constraints or investor fatigue, creating openings for family offices to provide fresh capital. Pay-to-play provisions in venture capital—requiring investors to participate in follow-on rounds or risk dilution—further enhance these opportunities.
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Expanding into niche and emerging assets
Family offices are increasingly attracted to unique investment opportunities that fall outside traditional asset classes. Investments in real estate tax liens, agricultural cold storage, PIPEs (private investments in public equity), niche secondaries, fertility clinics, and even niche assets like whisky and litigation finance offer family offices distinctive, non-correlated return streams, the survey highlighted.
Investment management, technology and governance
Family offices are evolving beyond traditional wealth preservation and are building robust internal capabilities, including investment management expertise, advanced technology adoption, and stronger governance frameworks. Many are hiring experienced professionals from buy-side roles and investment banking to enhance their teams, improve decision-making, and better adapt to market complexities.
