Family Office Leaders: Insights and Best Practices

[Music] gentlemen thanks so much for joining today it is a very broad topic that we have so we'll try and try and keep it quite focused but if we could start by just introducing yourselves briefly for the benefit of the audience happy to meet you all I'm I'm Julian um originally from Hamburg now based in zuk in Switzerland Next Generation uh as son of the family business we have been involved a lot with shopping mall in Europe these days more into hospitality and Logistics real estate but then also diversifying into private equity and other options apart from that uh I've studied sustainable Urban Development in Oxford and my big passion is for sustainability and real estate where I found it separately from the family business also my my own company where we're doing um mostly Engineering Services with buildings um and actually yesterday uh having done also the forest project here in Dubai which which I'm quite glad and and happy to look more into the region because I think it's fascinating we can drive down energy costs here as well thank you hi guys um good morning I'm Patrick sang the chairman of uh sangs group we're a fourth generation single family office um we focus on Innovation we also do uh real estate but focus on technology and we try to exert uh positive influence and impact for our investments um I'm also the I'm also the chairman of uh founder of the Hong Kong ambassadors Club where we try to promote Hong Kong uh trying to bridge East to middle east to west by bringing uh different kinds of Investments and projects uh to different parts of the world including the the Middle East we managed to bring four delegations to the UAE in the last six to nine months excellent thank you H hi good morning Hass alfardan I'm the CEO of alfardan group I'm a third generation member of the alfardan family very delighted to be with you here today our group was established in 1954 prior to the foundation of the Emirates and I think we're one of the first family businesses in the region to establish Shar compliant Family Trust so our businesses range from the traditional natural Pearl and jewelry business we also have one of the largest msbs in the region Al fine exchange and we also have a traditional real estate portfolio and we also invest our funds on behalf of the family excited to be here with you today and happy to be part of this panel with my respective colleagues so you've all come from quite let's say traditional sources of investing so the the real estate the FNB so I'd like to talk a little bit later about how that's involved evolved but you're also from like third generation or Beyond and we've been speaking about some of the challenges earlier today of succession how have each of you or how have each of the family offices businesses ensured that this succession is successful and then we can dive into some of the challenges as well so in our case we're coming originally from 1800s so it has been quite a while and um we actually had quite a panicking um year when when Co happened because with shopping malls it's obviously a massive it's a massive impact which we had there then plus online competition and the rates luckily we were landlords with 10year contracts so we could move out of that but like that was the time where we had to reshift a lot so um we were quite happy with the new Investments we did but back then we had to react and then um there is probably always something happening in family businesses where you at least can react faster so when I can compare it to corporates you typically have the problem that there long decisions are going on internal hierarchy at least we can react flexible and that's also for example something which we're doing now with a new realate techn uh investment strategy where we're looking into non-performing assets these days buying them quite cheap because not that many people are buying and then um transforming them with our engineers and selling them off to institutional funds U because their mandate is obliged to have only green buildings so it's quite a niche sector which we can do there but again it's very reactive very opportunistic and I think that's that's really the secret like that sometimes family business can endure longer because we can react quicker and then obviously having the experience and then uh a second point for succession is probably like personally um there's always the question if myself I'm I'm getting more involved in the family business myself I purposely decided to to found my own thing because I wanted to be a little more independent because otherwise you have the issue that there are always internal policies also going on with your father with your with your uncle so uh in that case I wanted to have something separate completely separate also financially and from connections uh and I think some sometimes that can be very important some some Next Generation members might be very willing to take on that step but others might find their own way and their own passion and I think it's important for every family business to nurture that I uh share the same um thinking as Julian I was talking to Hassan off off stage earlier I think U you know we we evolved from uh you know as farmers in Hong Kong were 14 Generations in in Hong Kong my grandfather moved from Hong Kong to the UK in 1956 uh one of the first wave of Chinese immigrants to start Chinese restaurants in the UK and um he was the first one to start a Chinese restaurant in belast and Dublin in Ireland which is where I actually was born and raised um so my thinking and and so forth is very different to my previous generation than the second generation my grandfather so um I think one thing that's very uh real and true for all businesses whether it's family office or otherwise we got to keep changing and uh changes that only constant so we've evolved from restaurants to real estate and about 15 years ago just after the uh financial crisis we started to invest heavily in in technology which is the only thing we invest in now um I think one thing that we don't change is just the core values and the philosophies of what uh the previous generations have done from a very you know traditional Asian background um but in terms of the sectors that we look at are very different so now we're looking at different things from AI to fintech to space Tech and obviously with um the recent trend of um how the world is going sustainability ESG and obviously with the cop 28 coming in the next uh couple of days in the UAE um we've been heavily been investing and looking at different kind of smart City Technologies including uh solar panels electric vehicle charging stations to uh Smart City Robotics and even uh plant-based foods which helps to um not only um create positive impact but also we can you know make um Financial gains wrong sure if I can just maybe look back at the the reason why really we started to look at structuring I remember my my grandfather who's the founder of our business hassim fan came to us and said you know I want to make sure that we have a smooth transition from one generation to the other the the start of our business really is very much tied to the to the the main business that was here in the region you know in in the early 1800s and 1900s which was the natural Pearl trade that was really the uh the main source of income for many many families in the region so when my grandfather started it was before really the foundation of the country so as a result of our flourishing PE business and having to deal with various currencies uh you know from from different Traders around the world my grandfather found himself with a with with a problem that he had to solve so in 1971 when the country founded we started started aleran exchange which is really an extension of our of our natural Pro trading business and over time we ventured into real estate and we set up we set up our family office when when we decided to set up our our trust in 2017 you know we had just started having discussions with adgm and they introduced us to this concept of of Family Trust so we we we identified who are the eligible people within our family people that have the relevant experience the relevant education and we segregated the family from the uh from the business and we selected people that we felt had the the best qualifications the right education to be able to take to take the company forward so for us and I think for many families in the region they are at that point considering the amount of wealth that transitioning among Generations that they need to have these conversations they may be uncomfortable they may be they may be unpleasant but it's important to have these discussions with a view to to not only not only allow the business to to continue to to progress and evolve but also to allow these these families to pass on the uh you know the mantle to the next next Generations so what stages were all the family businesses at when you decided to set up the official family office and I think it's interesting you know you've mentioned that some family members will not be the best person to come and become involved with family office as if at all like how do you balance that between family family members and external parties maybe we start with Hassan and sure U the selection process has to be very objective you know so we we set out a an eligibility criteria you know depending on have people worked outside the family business have they you know do they have the right qualifications so really we had to filter out those that we felt were the most uh the most I would say capable of taking on these jobs and sometimes that's not a very that's not a very nice discussion to have amongst the family but it is the right it is the right decision it takes a degree I think of self-reflection to recognize either one is perhaps capable or uncapable but also also it's important to allow people to give them the opportunity to evolve if somebody for instance may not be eligible at this time we actually support them you know we we send them to to targeted courses whether it be a directorship course a governance scores or or a very very specific let's say kind of uh skill that they need for a particular for a particular role a CFA if they want to pursue a role for example as a CFO or or you know or perhaps a chartered accountant so really finding what is it that the family members need to progress it's not about really allowing or not allowing people it's making sure that the people that have got the right the right skills even the right ude to be able to take the business forward uh great question I think uh from a you know Far East standpoint in Asia were a lot more traditional and conservative so you know the the families like to keep the businesses within the family and sometimes that could be the demise of of businesses because like you said um sometimes the people from your family might not be suitable um for the jobs so um I think the reason why a lot of European and American Family offices have been very you know flourishing you know like Julian you know since like 200 years the reason being is they've identified that sometimes you might have to employ or engage a nonf family member to be you know to professionalize the structuring of how the business is run and I think if you're able to segregate that into a trust or find Professional Management the chances of the business to continue at the next stage is better because at the end of the day um it depends on what you want at the end of the day is it a company that's going for financial gains or is there an element where you want part of the family to be part of I think at the end of the day you probably need a hybrid model where you do need some family members involved because um because of that family connection the passion to you know sustain the business will be longer but you also need a check and balance in professional eyes to help you to move the business forward so what we've done is we've been quite lucky to uh do what we've done which is to keep changing evolving to do better but we've we've hired a lot of uh people from outside to help with the business and I guess what you mentioned about the families it helps to ensure that the values also retained as part of the investment philosophy and in our case uh it's it's very much also a question of competence um who who is educated in what field and then we are trying also to um to differentiate in the invest committee who is deciding what for a specific sector so that you're you're getting a little bit less into discussions that or or arguments in terms of like who is responsible for what and in in my case with the sustainability sector this was actually the the hardest pitch the hardest sell to my own family so and then I think that's that's quite common also in others um that uh whenever you as a next generation are coming up with a new disrupting idea it's it's quite hard to integrate but these days it worked out as I've mentioned previously suddenly they adopted that model into into the own investment process that we are now doing this Niche strategy in terms of transforming buildings another thing which I see more these days which we haven't done but I think in Europe it's quite a phenomenon that sometimes also now family members from another family business are going into another one because uh exactly as you said there are sometimes also the external advisor or members but often that hasn't work out properly because the issue is how would you get an external member ideally if there's a trust then it's a different issue but if it's just like from a Head Hunter Head Hunters would look for experience only and people typically have experience as a competitor in a different sector but not with a family business so it's much more important to have the emotional connection to all the family members and to deal with that and that's probably something where we have more experience with and can can have that um I think in the in the end it comes down to that that you're really positioning yourself properly in that and uh can can deal with with all the different extra factors because we obviously privileged if we decide to to um get ourselves involved in the family business as well but in the end it's it's nothing nothing different so you have you have to be successful from your very own kind and from your own experience and competence and and just use the resources better um but if if someone is not that engaged then it might be better to have a more passive rule actually let's talk a little bit more about those shared Family Resources we heard from sham from moras earlier today about how they're more and more looking at partnering with other family offices and investment firms I'd love to talk a bit on the deal sourcing side are you partnering with other family offices is this something that you're seeing increasing and what do you look for sorry this is a very long convol question and what do you look for with your car Investment Partners so it's it's a little bit like a marriage if you're doing a a club investment together so first of all we are single family office it's it's just our investment and that's that's a principle if it's obviously a ticket size which is much higher and we want to get the deal then sometimes in exceptions we co-invest but it is not easy I I think it sounds easier in theory but like it really has to work because then you have basically two strong OS typically coming together and that might create issues so um we have seen deals which on the paper they look perfect but then it didn't work out because someone had a personal problem with it so uh Club Investments can work out for sure but it is it is very much a question that you know each other better it should be not only on the purpose of achieving that higher ticket size common values a common goal is is quite important and in the end it's kind of forming a team you're not as operative together but you're investors together so um that's one thing and then deal sourcing is obviously still very much coming from a network I think that's also the the the big advantage of family offices because there's intransparency in the market and we benefit from that so and we don't have the resources to have 100 Financial analysts getting getting through all the analysis so in our case it's really finding the niche opportunities and also investing against Trends I think that's also super important Venture Capital funds these days are typically going into one mainstream Direction We tend to look for something which is completely new and uh that's obviously the best investment if it works out uh for us I think Partnerships are key uh to what we do I think uh not only just in business but in life it's all about Partnerships we can do everything on on our own we we do a lot of Club deals we co-invest with a lot of our friends and other fellow family offices the reason being is sometimes we might not have expertise in AI or biotech then we lend our um you know we borrow our expertise from some of our friends and vice versa when sometimes when we lead the deals then the other family officers would just follow our tagline for SS group is think Global be local what it means is that we have to think big very Global like what Abu Dhabi is but at the same time if you don't have the local on the ground partnership with people like Hassan that work with us we might not understand the local trades cultures and what people are really thinking like for example in China for a foreigner to do business without a local partner nine times out of 10 you lose your money because you need a local partner to help you guide through and navigate the the various difficulties and challenges so we are all for uh co-investing and working together with our partners thank you perhaps maybe building on on on what Julian and Patrick said which I agree with very much I I think when I look at the the sheer richness and breadth of of family offices we have in the region so really I think we we are spoiled for for choice and we try to to work with families that have a very similar risk profile that that we do and also are looking to invest in the same sectors that we do I mean we we're very heavy on financial services and we invest synergistically to our to our core business so and I look at for example forums like the adgm whereby you know you have some of the best money managers in the world now are setting up shop here offering more and more opportunities for us so we're very much focused on financial services and we will continue to invest with families in the region here excellent and we just have a few minutes left and I'd love to just close by looking at you've mentioned that how you have evolved you're now looking at more sustainability technology impact where do you see or what excites you most in the investment world right now and you have one minute each I'm I'm definitely fascinated by uh combining profitability and sustainability and this is still not that much on the agenda so you have obviously sustainability now is a big topic but it's mostly associated with costs not too many people are getting into the technical details how you have a return on investment after two years what is easy installation of technical uh appliances so a very selective approach what is actually worth it to have a proper business still excites me a lot and the biggest purpose behind this is is the nature and biodiversity and in the the free time I I love to hike all over the world long distances that really makes me happy and uh I feel like um linking that to to the previous discussion of Christi that's also one way uh how you can become more happy to connect more with the nature because in the end that's where we're coming from and sometimes with all our artificial surroundings we get that so if he if you can become more focused on that and combining that with our economic model then we have very excited times ahead and if AI has taken some some of the um tools which we which we are normally using off from us that we have more free time for that it's amazing because um in in the end biodiversity has has has brought us that far and uh we we should definitely appreciate that so sustainability is uh uh very integral part of our strategy for the forthcoming years um on the December 8th we have a uh Hong Kong climate day at comp 28 where we have a a booth in the Blue Zone uh we're actually showcasing three of our portfolio companies one is called uh rice robotics which is a leading smart um robotics company that from Hong Kong and we're expanding into the Mina region the second company is a grade energy which is a a leading uh raw raw materials energy um solution solution provider and then last even not least green Munday which is the leading Asian plant-based food tech company um that we're bringing also to the region so um we're also trying to combine uh like what um Julian said profitability with sustainability so we're always looking for projects that can provide you know positive impact and Beyond uh to what we do from our point of view we look at sustainability quite closely within the alfer exchange business now as a say as a business that's one of our core I would say principles is that we are trying to drive Financial inclusion within within the translate population of the United di emats so we are working very closely with with certain I AI based Technologies to develop a solution to address I would say the last mile journey of for transient customer base for us we we're not only trying to drive Financial inclusion we're trying to drive digitally LED Financial inclusion by bringing more digitally excluded people into the foray of financial services via VIA digital Solutions so we'll be making announcements in publicly about these Solutions very soon excellent well gentlemen thanks so much that was a great optimistic note to end on as well please thank my wonderful panelists Julian Patrick and her son for joining us today