Ilias Georgopoulos (IQ-EQ): The evolution of asset owners: from short-term growth to long-term value
According to Ilias Georgopoulos, Global Head of Private and Institutional Asset Owners at IQ-EQ, “Sovereign wealth funds and family offices share a similar objective: the preservation and protection of wealth for future generations”
Tell us about the role you’ve recently taken with IQ-EQ.
IQ-EQ’s service offering is split across three key segments in line with our different client types and their needs: asset managers, asset owners and corporates. As Global Head of Private and Institutional Asset Owners, I lead the asset owners segment, which encompasses both private and institutional wealth holders.
Last year, all asset owners were brought under one umbrella in our Private & Institutional Asset Owners (P&I) segment. The “Private” part of our P&I segment includes ultra-high-net-worth (UHNW) individuals, family offices, endowments and foundations. The “Institutional” part of P&I is an important strategic focus for the Group and includes sovereign wealth funds, pension funds, insurance companies and supranationals. Private asset owners are becoming increasingly sophisticated and adopting institution-like practices, meaning private and institutional asset owners are more aligned than ever before, so we wanted to adapt to reflect this change in the market.
How are your clients’ needs evolving?
There are two main trends: on the one hand, structuring is becoming more complex and international, and on the other, investments are seeing a growing focus on ESG and the sustainability of wealth. If you look at the private side, you will see strong activity in the single-family office space, mainly because ultra-high-net-worth (UHNW) individuals are evolving generationally and geographically. They now require a diversity of services and products that can rarely be offered by a single player. For example, a third-generation family will typically have members residing in multiple parts of the world with different tax regimes as well as differing investment strategies and objectives. The new generation is looking at less traditional approaches and tends to focus more on the private markets, as well as sustainability and impact. This complexity requires different investment structures – trusts, SPVs, domestic and international or private funds – and a single service provider that can handle all the permutation of their needs. This context makes the creation of a single-family office an obvious choice for these families.
What about institutional asset owners?
These clients are evolving very similarly to private asset owners. For instance, sovereign wealth funds (SWFs) are focusing more and more on sustainable investments. SWFs’ interest in ESG has grown significantly in recent years. According to Kearney analysis, as of July 2022, 75% of SWFs had an ESG policy and 30% had set a carbon emissions target. These percentages will only continue to increase.
SWFs from oil and gas countries are tending to increase their investment allocation to sustainable energy and geographic diversification. Increased interest has been heavily fuelled by the transition to clean energy, where investments by SWFs have almost doubled annually since 2016. For example, in October 2022, Saudi Arabia’s Public Investment Fund (PIF) raised $3 billion via its first green bond sale—the first SWF globally to do so. Subsequently, in February 2023, PIF announced its plan to raise an additional $5.5 billion through its second green bond sale. To support its target of reaching net zero emissions by 2060, PIF expects to invest more than $10 billion by 2026 in eligible green projects, including renewable energy, clean transport and sustainable water management.
How do you anticipate the evolution of the asset owner space?
The asset owner space will continue to be extremely diverse at initiator level – from UHNW individuals to family offices to SWFs. Two main drivers will fuel the growth of the sector: firstly, the fast-growing complexity of structuring, and secondly, the strong need for involvement from the wealth holders, who want to invest closer to the real economy, to society and to specific regions.