Rami Harajli is the Chief Investment Officer of International Venture Investments Holding, a conglomerate family office based in the UAE.
Historically, family offices focused on conservative investment strategies aimed at capital preservation, primarily investing in bonds, real estate and commodities. However, today’s family offices have evolved into leaders in alternative investments, private equity, co-investments, venture capital and impact investing.
The transformation of family offices into powerful investment entities has been driven by the adoption of innovative financial solutions and modern investment strategies.
Taking A Modern Approach To Investing
Family offices have refined their financial engineering and investment approaches, responding to technological advancements and an evolving global financial landscape shaped by both international and local policies. Recent financing solutions blend traditional banking products with customized structures, including a growing reliance on debt financing to diversify equity across multiple projects. By securing non-recourse and limited-recourse financing, family offices can leverage their capital, expanding their investments across sectors and regions.
Family offices have taken a more active role in direct investments and co-investments, particularly in high-growth companies and startups, enhancing their control and flexibility. This shift is also driven by the growing desire for greater control and customization.
Like many family offices, International Venture Investments Holding takes an active investment approach, emphasizing the successful development and smooth transition of projects into their operational phases. Central to this strategy is operational autonomy, achieved by forming dedicated management teams for specific projects. These teams are held directly accountable to the family office, ensuring that strategic objectives are met while promoting accountability and operational excellence.
In 2020, our office became the lead investor in a hypermarket development startup based in Baghdad, Iraq, that has since grown into a remarkable success story. Beyond providing capital, the family office played a pivotal role in supporting the startup’s executive management by offering local expertise in areas such as development, logistics, legal advisory and operational processes specific to the region. As an active stakeholder, IVI Holding maintains a deeply engaged role in the startup’s strategic decision-making process.
Embracing Innovative Strategies
Furthermore, family offices are moving beyond traditional strategies, pursuing co-investments and bespoke financing structures to better align with their long-term goals. Their focus on wealth preservation has led to sophisticated risk management strategies, including geographic diversification, hedging and tax-efficient structures. Geopolitical and macroeconomic uncertainties, such as inflation and market volatility, have prompted family offices to diversify further into private markets and real assets.
While family offices play a valuable role in providing financing to companies and startups, they also strategically use financing solutions to fund their own direct project developments. By optimizing leverage, family offices can minimize their equity contributions, allowing them to maximize capital efficiency while expanding their investment portfolios across multiple projects. This approach enables them to achieve greater financial flexibility and returns while managing risk effectively.
The increasing shift toward impact investing and ESG strategies reflects a dual focus on achieving financial returns while creating positive social and environmental outcomes. As a result, family offices are embracing innovative financing solutions and cutting-edge risk management techniques, while ensuring wealth preservation for future generations.
For family offices to see successful outcomes with this updated approach to investment strategies, risk assessments and financial solutions, they need to have a proper governance structure with an effective decision-making process. A clear framework of governance, conflict management and accountability is key to minimizing the risk of misaligned financial choices. This helps to align decisions with strategic long-term goals.
Technology Taking Center Stage
Technological advancements, particularly in fintech, blockchain and AI-driven platforms, have also enhanced family offices’ access to new financial instruments, improving decision-making processes.
Our family office recognized the critical importance of integrating advanced technologies into its decision-making processes to enhance efficiency and precision. As part of this initiative, AI technologies have been strategically implemented across key areas, including investment analysis. These AI systems facilitate the processing and analysis of a large amount of data, enabling the identification of lucrative opportunities, supporting comprehensive risk management, and assisting in a data-driven decision-making process. This integration reflects our office’s commitment to leveraging innovation for informed and impactful strategic planning.
Looking Ahead
It goes without saying that long-term investment objectives are only attainable as long as family offices can navigate the limitations, challenges and market complexities of tomorrow’s business environment. As family offices have been investing across diverse regions and sectors, many have excelled in cross-border investments, understanding regulatory frameworks and blending traditional investments with alternative assets and have recently given special attention to investments in artificial intelligence.
According to the UBS Global Family Office Report 2024, generative artificial intelligence is the most popular investment theme, with 78% of family offices claiming they will likely invest in AI in the next two to three years. This clearly indicates that many family offices have been embracing modern investment opportunities with proactive engagement in emerging technologies that are poised for significant expansion, aligning with global investment trends and adapting with the innovation and technological advancement of evolving markets. By maintaining robust governance structures, conducting thorough risk assessments and fostering innovation, family offices remain well-positioned to meet the challenges and capitalize on the opportunities of an evolving market landscape.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Read the full article here
