Deutsche Bank: How Do FOs Manage Financing?
Frankfurt-based Deutsche Bank has launched a new report focused on how family offices worldwide utilize financing, be it for leverage in investment strategies or collateralization of illiquid assets.
According to Deutsche Bank Wealth Management’s inaugural «Family Office Financing Report 2025», 61 percent of single family offices said that leverage was a key tool that was either a strategic topic discussed by investment committees and directly affecting risk and return targets or an important topic for risk and positioning. In Hong Kong, for example, this figure was especially high at three-quarters.
«Economic uncertainty prevails across many regions worldwide, but family offices seem to be preparing themselves better than in previous cycles. In many cases, this includes setting up credit lines well ahead of planned utilization and secured by less liquid collateral types,» the report said.
Illiquid Assets
The type of illiquid collateral partly refers to private markets, in which family offices have been increasingly adding exposure in recent years. According to the report, the average family office portfolio was 57 percent illiquid with most respondents leveraging such assets. Asia Pacific was a relative outlier with portfolios being just 39 percent illiquid.
Outside of private markets, 61 percent of respondents also held luxury assets with art being the leader at 39 percent, but only one-fifth applied leverage to such holdings.
Private Credit
Within private markets, an area with clear appetite is private credit with 83 percent of respondents saying they would lend to third parties as an investment, including through club deals.
Over half globally say they would want a minimum of 10 percent returns with Hong Kong once again standing out with over 75 percent expecting 10 percent returns or more.
Larger Complex Deals
Leverage is also being applied for the execution of larger, more complex deals. In Southeast Asia, for example, ultra-high net worth families have been seeking financing solutions to take their family-controlled companies private via buybacks.
Globally, the top concern when borrowing is price (55 percent) followed by flexibility of usage and repayments (41 percent). The most popular type of lending structure is loans with full or partial recourse (46 percent) while emerging market respondents preferred loans with no recourse (59 percent).
The report was based on responses from 209 family offices who were surveyed between May 9 and July 14. Respondents were based in Europe (65 percent), US (14 percent), APAC (9 percent), Middle East (3 percent) and other markets (8 percent). 35 percent had assets in excess of $1 billion with real estate (63 percent) being the top industries in which families operated.
