Yacht, villas, buy-backs: the top investments of the ultra riches

Top investments. Real estate and private companies capture a good share of some $ 4 trillion of family capital ready to invest.
As example: located in France, the most expensive house in the world christened Château Louis XIV was sold at the end of 2015. Its price: 275 million euros so 55,000 euros per square meter. Top investments and wealth: $ 21 trillion, this is the net worth of ultra riches.

Financial power is expressed in size, both physical and arithmetical. In 2014, the net worth of ultra riches (liquid assets over $ 30 million) exceeded $ 21 trillion. Europe captures most of the wealth, and it is in London that concentrates the largest number of ultra riches. Top investment. Abroad, it is also in Florida that the financial and real estate boom generates the most visible excess. The retailer of super yachts 4Yacht, based in Fort Lauderdale, proposes “Double Century”. It’s a 200-meter huge yacht (two football fields) for the modest sum of 700 million euros.

Apart from the favorites, where does the manna of ultra riches invest? In recent years wealthy families have developed a taste for new top investments. Unlisted companies, especially with the rapid growth of new digital companies. A quarter to a third of the money of large fortunes take place now in unlisted companies. And, recent trend, these families are increasingly bypassing the professionals of asset management.

Top investments, wealthy families and sovereign funds

top investments

Real family office war machines. These structures used to place family fortunes are today as powerful as private equity firms such as Blackstone or Carlyle. The financial power of wealthy families: some $ 4 trillion circulating around the world, on the lookout for lucrative top investments. Their only competitors in terms of financial strength are the sovereign wealth funds of countries rich in natural resources.

In December 2015, half a dozen of the richest families in the United States, ranging from agriculture to beverages, gathered in Miami. For an hour, they listened to a buyout expert who works for the Pritzker brothers (owners of Hyatt hotels). Like Warren Buffett, Michael Dell or Bill Gates, these families who once entrusted their money to investment companies now want to buy businesses themselves.

We can estimate that 70% of family business take profits from top investments without going through intermediaries. These ones who typically charge 2% commission and 20% of the performance of the acquired company. These large fortunes therefore obtain higher returns on these assets: 15% in 2015, double the number of private equity firms. Families often “pact with the enemy” by selling or buying shares in private equity giants. It’s like the owners of Gianni Versace who sold 20% of the Italian fashion house in Blackstone for 210 million in 2014.

Real estate offers security

Real estate will remain essential for the next ten years for the ultra rich. According to Knight Frank / Douglas Elliman’s latest Wealth Report, investment in stone accounts for a total of 35%. The 24% in the form of personal and secondary residences and 11% in the form of investment in offices, hotels or shops centers.

The importance of real estate can have an explanation by the superior security it provides in comparison to the stock market. Indeed, as top investments, it looks as an object “that can be sold in the future”. Sign of the times, the most expensive house in the world sold at the end of 2015. It was named Château Louis XIV and its owners – a wealthy family of the Gulf – acquired it for the sum of 275 million euros, or 55,000 euros per square meter.

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