Patni of RAAY Global Investments believes family offices are also co-investing with other family offices. His family office has made around 14 such investments so far, going up to $4 million (through Nirvana). Nirvana’s total corpus is around $40 mil - lion of which Amit and his brother, Arihant, have put in $15 million. “Families find comfort in co- investing with another family,” said Ayushi Patni, Amit’s daughter and director at RAAY Global. “Nobody wants to foot the entire cheque. If someone asks me to invest I will ask who else has agreed.”

Clearly, one of the main jobs of a family office is to make sure families don’t put all their eggs in one basket. Harsh Mariwala, chairman of consumer goods company Marico, launched his family office, Sharrp Ventures, around four years ago when his son, Rishabh, explained to him the dangers of not spreading one’s risk. “Being an FMCG company, we get dividends and those dividends need to be invested somewhere. Until Rishabh joined, most of our stocks were used to buy back Marico’s stock,” he says.

Their family office doesn’t just look at traditional investment opportunities in equities but also funds other ventures, including those of family members. Some of the businesses the Mariwala family office has co-invested in are India’s largest beer chain, Beer Café; supply chain solutions provider LEAP; and health product website HealthKart. It has also funded Rishabh’s sister Rajvi’s initiative for mental health, Harsh Mariwala’s Ascent, a peer-to-peer learning platform for small businesses, and a new aqua-physiotherapy centre called AquaCentric. “If there is a great opportunity in the tech space with technologies like artificial intelligence, then we could invest through a fund. So it is not written in stone that we will invest only in consumer companies,” says Chaitanya Deshpande, who was head, M&A and strategic initiatives at Marico and now manages the family office along with Rishabh.

Their office allocates what the family needs for these ventures and lifestyle needs, and the rest is invested, says Rishabh. He says Sharrp Ventures is a separate institution which happens to have the same owners as Marico. It usually invests below Rs 10 crore in a business and going forward the average ticket size of the investments will rise. “The short-term goal is wealth multiplication. As the corpus grows there will be a need to institutionalise the family office. Then it becomes a self-sustaining identity of its own,’’ he adds. Rishabh is clear that Sharrp will invest only in listed equities and not in debt, commodities and precious metals. “We do have an external wealth manager who helps us out, but through the family office, we can tell him exactly what we want and what our risk appetite is.

The sky is the limit is the message one gets when it comes to the investments by Mariwala’s family office with both Rishabh and Harsh Mariwala agreeing that they aren’t averse to the idea of the family office completely taking over a company in the future.

Investments by India’s super rich in startups and other businesses vary. Premji Invest, for instance, paid around $52 million for an 8% stake in Fabindia in 2016, four years after it first picked up a 7% stake in 2012. It also has a 2.2% stake in Aditya Birla Capital, the financial services arm of the Aditya Birla Group. Similarly, Hero Enterprises, the family office of Delhi-based industrialist Sunil Kant Munjal, has invested Rs 82 crore with the family office of Harsh Mariwala in India’s largest online beauty platform, Nykaa, and is also an investor in the country’s largest hotel aggregator and asset manager, OYO. The Burman Family Holdings, as the Burman family office is called, has invested more than $500 million in new economy businesses like online insurance aggregator Policybazaar as well as financial institutions like RBL Bank and Aviva Life Insurance. It has also invested in Indian Premier League team Kings XI Punjab and children’s book publisher Amar Chitra Katha.

RNT Associates, the family office of Ratan Tata, has pumped millions into more than 30 companies across the e-commerce, payments, and electric vehicle segments. It has also launched RNT Capital Advisors—a joint venture of RNT Associates and the investment arm of the University of California—to create a joint venture fund, which has invested Rs 670 crore in cab aggregator Ola along with Falcon Edge Capital.

Similarly, Catamaran Ventures, the $130 million family office of N.R. Narayana Murthy, has also been investing in different businesses. This includes $18 million in online fashion retailer Yebhi and $20 million in online shoes and apparel retailer Bigshoebazaar, according to deal tracker Grant Thornton and Venture Intelligence.

The family business universe is growing. And so is its heft. Traditional investors were stunned when the home offices of Sunil Kant Munjal (Hero Enterprises) and the Burmans (Burman Family Holdings) bid for the country’s second largest hospital chain, Fortis Healthcare. They eventually pulled out of the race but were willing to invest more than Rs 1,000 crore upfront. “Unlike traditional venture capital or private equity funds that have what is called an investment thesis, in family offices, investment plans can evolve. We can flip our investment thesis, change it or tweak it depending on the opportunities available. The agility, flexibility and speed of closing a deal is far higher in family offices,” argues Natraj.

Family offices make your money work for you but are not constrained by rigid investment rules or defined time-lines in their investments. Unlike private equity and venture capital funds, which typically have a seven- to 10- year horizon, family offices have the luxury of time, which allows them to be more flexible and innovative in their investment decisions. Moreover, the companies that get investments from family offices also benefit from the reputation and brand equity of the family name.

Another key function is will management and succession planning, one of the biggest fault-lines in family businesses. Every family, according to Kohli, has to find a way to reconcile its personal and professional interests because the succession process can bring these two issues in direct conflict, putting both the family and business at risk. Of course, there is bias in investing. “Investments by a family office are often a reflection of the matriarch or the patriarch and what they like. They may like an industry, which is often an extension of their own business; or a segment that they personally like,” says an investment manager with a billionaire-led fund, who did not wish to be identified.

Family offices have come a long way. The billionaire Rockefellers set up the first family office in the late 19th century in the U.S. to manage the family’s fortune. Since then, most billionaires across the world have set up such offices. Kohli compares the role of the family office to the munshi of yesteryears—the original wealth advisor of kings who managed the wealth while the ruler accumulated or lost assets and wealth through battles, as well as marital and political alliances. He was also a trusted advisor, or margdarshak, for most of the king’s big life decisions.

Since the rich and the famous trust them with their personal wealth, at the end of the day what do they expect from the family office other than strict confidentiality about their home affairs? “If I trust you with my money, I’ll expect you to go beyond being just the best financial advisor. You will also be my investment banker, real estate advisor, and estate planner, all rolled into one. Additionally, I expect nothing less than a 3 am counsel, a friend, philosopher, and a guide who understands and takes care of all my life needs,” says Kohli.

Of course, there are challenges along the road such as operational risks when everything is done in-house and ensuring an appropriate governance structure. So, the role of the modern-day munshi is only likely to become more complex. As demands and pressures on family offices increase, they will also be expected to be chief risk officers to handle leaks of family secrets, cyber security threats, concerns over privacy, and reputational risks. They will also have to help cope with factors beyond the control of the top management such as changes in government regulations, markets or product disruption, or sovereign and political risks. But, most importantly, they will have to ensure that the family stays together during a crisis and doesn’t fall victim to the third generation curse.

(The story was originally published in the August issue of the magazine)

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