Family office sees market upheaval as investment sweet spot
Times of upheaval are the best times to invest in, according to Aradhna Gupta Dayal, principal of the (single) family office Regal Ford Asia.
“Family offices believe that in times of most uncertainty and in a perfect storm, the best business ideas are born and built. We are heading for that perfect storm,” Dayal said on stage at the at AsianInvestor’s 12th Southeast Asia Institutional Investment Forum in Singapore on November 22.
Looking from a private markets investment perspective, Dayal noted a recent valuation of $2.1 trillion in distressed assets in Asia alone.
“We like distressed investing and will definitely look into that. I own a lot of Chinese real estate bonds, people laugh at that but you can pick them up for pennies on the dollar right now, so I am adding to that. You can pick high-quality distressed assets at this point at a very low price,” she said.
Dayal has headed her Hong Kong-based family office for almost 30 years, originating from a landowning family out of India. While it has a commercial focus, some of the returns go back to India for charitable funding activities.
LOCAL TO GLOBAL
Dayal pointed out that the macro investment climate is seeing several headwinds coming together, such as disrupted supply chains, inflation and sustainability issues. This uncertainty does require investors to think differently.
Dayal is also the founder of Access Alts Asia, a Hong Kong-based investment club that aims to bring together global families and business leaders to invest in alternative assets across borders.
“As a family office collaborating with other family offices, we have always believed in cross-border investing, so this whole dynamic of deglobalisation is a very difficult situation for us, and obviously making all of us rethink our investment strategy,” Dayal said.
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Her business strategy is to find pockets of trends that are localised within a certain geography but have the potential to be scaled up globally. Here, she looks for good investment cases on the private market side.
As an example, Dayal mentioned her investment in the company FreshToHome, an Indian seafood logistics and distribution platform also focusing on meat. As India is 80% coastline and has a growing economy with rising consumption, fish and meat production requires timely and ethical distribution.
“FreshToHome is a local company with great potential within India, but can also be expanded to nearby UAE and Saudi Arabia. We have had Amazon coming in strong with us with an ambition to expand globally,” Dayal said.
Among other localised business ideas with the potential to go global when the opportunity arises, she also looks at supercomputing in Australia, biotech hubs in Boston and redeveloping of Hong Kong industrial buildings into affordable offices to cater for the demand for small businesses.
The Asia-Pacific Family Office Report 2022, published by Raffles Family Office, a Hong Kong-headquartered multi-family office, and Campden Wealth, a family-owned, global membership organisation headquartered in London, found that among 76 Asia-Pacific family offices surveyed, almost nine in 10 identified inflation as the leading risk.
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REGIONAL FOCUS
To mitigate risk and find long-term value, Dayal and her Regal Ford Asia will also align investment strategies with the development of the SAMENA region, comprising of the Indian Subcontinent, Asia, Middle East and North Africa.
“Throughout this region the level of digitalisation and the penetration of tech is incredible. The lives of billions of people are changing very rapidly with digitalisation in healthcare as well as banking and financing, for instance,” Dayal said.
She pointed out that centuries back, the SAMENA region accounted for about 80% of the world’s GDP. Fast forward through the industrial revolution, the development of the western world and colonisation, all of that is now reversing with strong GDP growth in India, China’ and Southeast Asia.
“Potentially, this rapid development can again make SAMENA account for a lion’s share of the world’s GDP within the next 50 years. That is a huge trend to be aware of as we build our portfolios with 50-100-year views,” Dayal said.
In keeping with this trend, Regal Ford Asia is investing in distressed assets in Asia, including the real estate sector in China and non-performing loans in India.
“We can get amazing yields and great conversions within this space. Overinflated companies like Uber with limited profit generation are the least attractive currently. There should be a real focus on profitability and looking beyond the hype,” Dayal elaborated.
Overall, however, Dayal remains positive about the ongoing market uncertainties and shifting investment climate:
“The world is in a state of upheaval. Some amazing trends will come out of it.”