Bridging Generations: How Summit Communication Group Aligns with Family Offices in a Changing World
Family offices are transforming. Adapting to complexities and embracing change. From governance transformation to investment alignment with family values, the international industry is witnessing a shift in priorities and strategies. The Asia-Pacific region is seeing a surge family office incubation, with a focus on philanthropy, impact investing and innovative investment approaches. Summit Communication Group help bridge the gap between traditional investments and the next generation's vision, by providing exposure to highly curated opportunities in ESG, Technology, Luxury Assets, Real Estate, Art and Entertainment.
The Changing Economy and Family Offices
The last decade has been kind to family offices, but the next seven years are predicted to be especially challenging. The complexities of the post-Covid economy are causing wealthy families to take a fresh look at their family offices, leading to greater agility and dynamism.
Summit Communication Group 's capital partners are at the forefront of this transformation, actively interacting with offmarket investments that resonate with the evolving values and goals of a new generation.
The APAC region is witnessing rapid growth in wealth, leading to a surge in family offices. The complexities of managing wealth, coupled with the region's unique economic landscape, are shaping the family office industry in APAC.
A New Perspective on Governance
The role of family offices is expanding beyond traditional investment and concierge duties. Reputation management has become critical, and the next generation's influence is leading to a re-evaluation of governance structures.
Family offices in APAC emphasize aligning investment goals with family values, choosing investment strategies, and focusing on familiar sectors. The integration of family vision and values into the investment process is vital. Three guiding principles are recommended: clarity on investment objectives, a robust governance framework, and alignment of interest with investment advisors
Priorities for Tomorrow's Family Office
Family offices must be swift, nimble, and adaptable. Structures are evolving, and the need for change is recognized by industry leaders like Simon Foster of TY Danjuma Family Office , "You need to build something swift, nimble, and changeable," he says.
Hong Kong's family offices are leveraging advanced technologies and investing in private market assets. They are also focusing on philanthropy and impact investing, facing challenges such as regulatory compliance and talent retention.
"Investment needs to be within the circle of competence, including familiarity with the legal culture and competitive landscape." - Xu Chen, Luhua Daosheng Group
The younger generation in APAC is embracing change and innovation, moving away from traditional asset classes, showing a preference for private debt and prominently allocating across these classes:
Technology & Fintech
Tech start-ups, with their potential for rapid growth, have attracted not only venture capital firms but also family offices in recent years. Elon Musk's success with Tesla and SpaceX has inspired family offices to explore early-stage and seed investing in tech companies. The allure of innovation and profitability has made technology a lucrative investment opportunity for family offices.
Our group is about to open a wealth-tech Series B investor raise - of US$150m - to our family office network. This is for a revolutionary digital lending ecosystem that addresses critical issues in property finance, ownership, management, construction, and technology. Tech Vals, multiple high-profile hospitality projects in the company’s active project pipeline and a planned NASDAQ listing within 3-4 years.
Another early-stage proptech client we’re soon unveiling to our family office network is revolutionising building facade management. They provide an innovative digital platform that employs a 3D model of a building for precise tracking of repairs, maintenance and defect liability periods. Backed by an experienced team of engineers and technicians, with strong traction in UAE, Singapore and Australia, this dynamic company are redefining building inspections and defect identification on extreme skylines yet to be built, as well as, the city skylines we are all familiar with.
Luxury Assets
As a luxury brand network we offer family offices unparalleled access to an array of luxury assets, including high-end real estate, superyachts, fine art, luxury vehicles, jewellery and contemporary art. We leverage our global connections and expertise in the luxury market to the unique preferences of clients, providing personalised guidance on market trends, appraisal, negotiation and due diligence.
Investing in luxury assets has inherent risks such as market fluctuations and liquidity challenges, so we work closely with clients on strategies to maximise potential appreciation, while emphasising the importance of thorough assessment of preservation controls and risk tolerance.
Carbon Trading
With climate change at the forefront of global concerns, carbon trading has emerged as a new asset class. Al Gore, a vocal advocate for environmental sustainability, has highlighted the growth of the carbon market, which expanded by over 20% in 2020. Family offices, with a focus on sustainable investments, are exploring this growing market. However, the risk of greenwashing necessitates experienced advisors, as Christine Lagarde , President of the European Central Bank , has cautioned.
Real Estate
Real estate, a staple in family office portfolios, offers stability and tangible benefits. As Warren Buffett has observed, real estate can act as a hedge against inflation and provide long-term cash flow. American family offices have increasingly invested in real estate, including direct investments, REITs, crowdfunding, and hedge funds. However, market crashes, local tax law changes, and liquidity challenges remain considerations, as evidenced during the pandemic.
Recently, family offices in our APAC and UAE network who have a penchant for real estate are looking to Indonesia (US$30.8bn), Bali & Lombok (US$1.64bn) and ASEAN 5 (US$138bn) for outperformance returns. Bali’s property market has experienced consistent growth for over 30 years driven by strong foreign direct investment. In recent times domestic consumption has driven up asset prices. Indonesia’s favourable macroeconomic outlook will drive property investment in the long term. And, the ASEAN 5 nations all have promising long-term forecasts.
Impact Investing
Impact investing, aiming for positive social or environmental impact, has attracted a diverse range of investors, from large financial institutions to family offices. Larry Fink , CEO of BlackRock , has emphasized the growth of this market, estimated at over $715 billion at the end of 2019 by the GIIN. The appeal of impact investing continues to expand, reflecting a broader shift in investment priorities.
Good Living Villages , our innovation and real estate client, is scaling an ‘Ageing in Place’ solution to address the problems facing Australia’s senior population. By decentralising elderly care and housing, they make these services more accessible and affordable to seniors throughout Australia. A rapidly ageing population, lack of affordability of senior residences, inadequate options, lack of control/ownership, and lizard-lounge tactics practised by unscrupulous property developers - are each issues the Good Living Villages model vanquishes. Their mission is to create a future where all seniors can age with dignity, security and a sense of community through quality intergenerational financial planning earlier in life. The combination of Real Estate and ESG Impact is why the Good Living Villages model has become one of the most sought-after offers within our family office network.
Art
The 2008 financial crisis highlighted the potential of art as an investment class. Celebrities like Jay-Z have invested in art, recognizing its stability against market volatility. By 2018, the global art market had more than tripled in value since 2003. Transaction costs, fraud risks, and illiquidity deter some family offices, as noted by art collector and hedge fund manager Steve Cohen.
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Yet, in his magnum-opus, Art as an Asset in the 21st Century , my colleague David Kusin presents readers with a ground-breaking exploration of the art market that challenges long-standing conventions and offers a transformative framework for the industry. Contrasting the art market with the global economy reveals its current status as a vestige of the 18th century, rooted in the establishment of the renowned London auction houses. He believes by overcoming existing inefficiencies and bottlenecks, the art market, encompassing its 150 submarkets, has the capacity to surpass the projected size of the Artificial Intelligence market in 2030 by fourfold - or from US $70bn to $400bn per annum!
Entertainment
Music royalties, a passive revenue stream, have attracted attention as a new asset class. Spotify's payment of over $7 billion in royalties in 2021 underscores the potential of this investment. Celebrities like Rihanna have capitalized on music royalties, enjoying revenue shielded from traditional financial market volatility.
“Through the glamour and allure of the film industry, your association with high-profile talent, and participation with globally recognised films at festivals like Cannes, a luxury sponsor's brand visibility and reputation can be significantly enhanced.” Gregory Gray, CEO of Summit Communication Group
Summit Communication Group is soon to introduce its Panoramic Film Fund , poised to reshape film finance. Tailored specifically for hedge funds, accredited investors, family offices, and luxury brand sponsors, this initiative offers a unique avenue for participation in the vibrant world of film investment. Combining capital protection and preservation strategy with the pulsating upside of the international feature film industry, the Panoramic Film Fund aims to provide dynamic platform for investment opportunities.
Wealth as a Force for Good
Venture philanthropy, a term coined by John D Rockefeller III in 1969, has often been likened to impact investing. In a speech before the US congressional committee, Rockefeller passionately defended the societal role of philanthropy, arguing that it should act as venture capital for tackling societal issues.
"Many family offices are keen to use their wealth as a force for good by channeling capital into meaningful endeavors." - Gillian Tan, Assistant Managing Director of the Development and International Group, MAS
Family offices are keen to channel capital into meaningful endeavours. This evolving role aligns with Summit Communication Group 's approach to offmarket investments . The agility, dynamism, and focus on meaningful activities resonate with the Group's investment philosophy and principled approach.
Warren Buffett, a prominent advocate for philanthropy, echoes this sentiment, emphasizing the need for calculated risks in philanthropy to address social problems beyond governmental reach. Venture philanthropy applies traditional venture capital principles to philanthropic initiatives, approaching charitable giving with the scrutiny of a professional investor.
"Our family business has a set of values - like the fact that our business has been around for 100 years, or more - and those values are perhaps one of the ways we attract talent, and also keep talent." Marc Puig, CEO of Puig, the Spanish luxury group
The next generation consistently cites social and environmental issues as motivating passions. Family offices in Hong Kong are keen to support social causes and environmental issues, seeking professional advice to achieve their philanthropic goals.
As Bill Gates has noted, the need for venture philanthropy persists, with family offices playing a critical role in navigating this space for success. The focus on social impact rather than financial returns sets venture philanthropists apart from traditional venture capitalists.
Interaction with Offmarket Investments
Family offices are increasingly engaging with offmarket investments , seeking opportunities that align with their values and long-term goals. Summit Communication Group 's extensive network and tailored investment strategies offer a unique platform for collaboration, providing offmarket investments to a global network of family offices.
Summit Communication Group four-pillar partner focus:
Founded in 2014 with the backing of most prominent family offices in the world, Summit Communication Group aimed to create a mutually reciprocal network tailored to the unique asset classes, targeted returns and risk profiles of family offices. Our membership has since grown to encompass over 850 families worldwide, with a significant presence in Singapore, UAE, Europe, North America, Hong Kong and Australia.
Our group provides businesses and entrepreneurs with unparalleled access to an extensive global network of family offices. Our offmarket investments initiative is a distinguished representation of the world's most established and expansive family offices, concentrating on networking, idea cultivation and co-investment.
Key Takeaways
Become a member
Join our international network, bridging family offices with curated opportunities in ESG, Technology, Luxury, Real Estate, Art, and Entertainment. Whether you're seeking investment or collaboration, connect with prominent family offices and align with the evolving landscape. Drop me a DM to explore how we can catalyse your success.
Written by Gregory Gray , CEO & Founder of Summit Communication Group on 6 August 2023
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Author of "Art as an Asset in the 21st Century." Available on the Barnes & Noble & Amazon publishing platforms.
1yYou should take a moment and read whatever Greg posts!