(Bloomberg) — France’s wealthiest citizens are increasingly directing their family offices to invest in private equity, while their appetite for private debt is waning and crypto remains marginal.
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“There is a lot of convergence between family offices and private equity because performance is generally good and there is less volatility,” Frederick Crot, president of the Association Francaise du Family Office, or AFFO, said at a press conference. “Families want their assets to grow steadily, without undue risk.”
Family offices are a relatively new trend in France and the AFFO — whose membership has grown to more than 100 professionals — sees huge opportunities for expansion, especially outside Paris and among so-called next-generation heirs.
France is home to luxury titan Bernard Arnault, who founded couture-to-champagne conglomerate LVMH and is the world’s richest person with a fortune of $201.7 billion, according to the Bloomberg Billionaires Index. The wealthiest woman, L’Oreal SA heiress Francoise Bettencourt Meyers, is also French as are the Wertheimer brothers behind Chanel and Francois Pinault, who started Gucci owner Kering SA.
In contrast to growing investments in private equity, interest in private debt is on the wane as borrowing rates look set to drop later this year, Crot said. French family offices also generally avoid cryptocurrencies as an area that is both inherently hazardous and less well understood.
The French organization says younger generation heirs of family fortunes — the ‘NextGen’ — are focused on impact investments, especially with an environmental bent. It’s also working to raise the profile of family offices as sources of capital for areas like artificial intelligence and semiconductor manufacturing.
“There is a need for a lot of capital in France and the EU in these areas,” Evelyne Brugere, executive vice president of AFFO, said at Tuesday’s press conference, adding that family offices are potential sources because they have cash, are long-term investors and some want to have impact.
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