Family offices shift to private markets for growth

Share current article via Email Share current article via Facebook Share current article via Twitter Share current article via LinkedIn Families are bringing more rigour to capital allocation through formal governance structures, specialist expertise and clearly articulated investment objectives, writes the author. Stock photo: A fundamental shift has taken place in the family-office landscape over the past decade. No longer viewed solely as custodians of wealth, family offices are emerging as influential participants in private capital markets. Driven by generational change, growing sophistication and a preference for greater control over investment outcomes, they are adopting institutional-grade governance while retaining the agility of family capital. The result is a new breed of investor: one that is reshaping how family wealth is preserved, invested and grown. Generational shift prompts change This evolution can partly be attributed to generational influence. As wealth passes to younger family members, interests increasingly extend beyond the traditional family business. Exposure to global financial markets, entrepreneurship and technology is influencing how capital is deployed. In this context, the family office has become more than an administrative structure. It serves as a vehicle for intergenerational engagement, giving the next generation a meaningful role in shaping the family's financial future and pursuing a broader range of investment opportunities. This shift should not be perceived as increased appetite for risk. It is a product of institutionalisation. Families are bringing more rigour to capital allocation through formal governance structures, specialist expertise and clearly articulated investment objectives. As a result, they are better positioned to access private markets (private equity, private debt, and venture capital) without sacrificing the control, flexibility, and long-term investment view that distinguish patient family capital. The shift is evident in the numbers While listed equities have long been the primary avenue for investors seeking growth and diversification, family offices are increasingly looking beyond public markets. Deloitte's 2024 Family Office Insights found that private equity allocations increased from 22% of the average family office portfolio in 2021 to 30% in 2023, while exposure to public equities declined from 34% to 25% over the same period. This shift suggests a growing preference for opportunities where investors can exert greater influence over outcomes and participate more directly in value creation. The trend extends beyond private equity. BlackRock's 2025 Global Family Office Survey states that alternative investments now account for 42% of surveyed portfolios, with private debt and infrastructure emerging as the asset classes attracting the strongest interest for future allocations. Nearly a third of respondents indicated plans to increase their exposure to private debt, while infrastructure featured prominently among preferred investment themes. Taken together, these findings point to family offices embracing a more active role as providers of long-term capital. In many respects, they are uniquely positioned to do so. Having built, operated and exited privately owned businesses themselves, family principals are typically familiar with the opportunities and risks associated with founder-led businesses, for example, growth, succession planning and governance. Their investment horizons are also naturally aligned with the long-term nature of private capital. Unlike many institutional investors, family offices are not subject to short-term performance pressures and can commit capital over extended periods, either through closed-end private capital funds or permanent capital vehicles. Their ability to tolerate illiquidity allows them to pursue opportunities that may be inaccessible to investors with more immediate liquidity requirements. Regulatory flexibility provides a further advantage. Unlike South African retirement funds, which are subject to Regulation 28 and its limits on private equity exposure, family offices investing their own capital are generally free to determine their own allocation strategies. This enables them to build meaningful exposure to private markets where they have conviction. Relevance in SA context At the same time, many family offices are increasingly motivated by objectives that extend beyond sole financial returns. The rise of impact and sustainability investing reflects a desire to align investment decisions with long-term societal outcomes. This is particularly relevant in South Africa, where family-office capital can support sectors with significant socio-economic importance, including infrastructure (transport, social and digital), telecommunications, renewable energy, real estate and SMEs. Family offices are emerging as an increasingly important source of funding for private markets. Equally, investment in private capital vehicles provides family offices with access to specialist expertise, networks, and deal flow. • Tsita is a partner at Tamela, a firm that specialises in corporate finance advisory, fund management, and principal investments.