Family Offices Plan to Trade Private Debt for Direct Deals

What's New

Family offices plan to cut private debt and add direct private equity over the next 2 to 5 years. The RBC and Campden Wealth report found 37% plan to raise direct private equity. Another 27% plan to reduce private debt. Liquidity concerns weigh on fund commitments. One office reported no fund investment since 2015, citing liquidity and manager concerns. Private debt managers raising from family offices should expect harder conversations on liquidity terms.

Why It Matters

Private debt managers have courted family offices as patient, income-seeking capital. These offices now rank direct ownership above pooled credit. They also report strong recent returns and longer wealth-transfer timelines, which leave room for illiquid control positions. Direct private equity sponsors and deal platforms stand to gain. Fund managers of every type face a buyer that worries about getting money back out.

By The Numbers

• 80%: U.S. share of allocations this year, though offices had planned to diversify abroad. It was 68% a year earlier.

• 44%: offices planning to increase real estate, the most popular addition.

• 12 to 15%: average private markets return in 2025. Equity markets returned 17 to 20% on average.

• Over 80%: offices expecting private investments to meet or exceed last year's performance.

Reality Check

The survey covers 155 single-family and private multi-family offices. Average wealth across the sample is US$2.25 billion, so smaller offices may behave differently. The report's own history argues for caution on stated plans. Offices said they would expand into Europe and Asia-Pacific, then raised their U.S. weight instead. Every non-U.S. region shrank. A plan to cut private debt is a stated intention, and the redemptions have yet to show up.

The Wrap

Capital from family offices is tilting toward direct ownership in private markets and away from pooled credit. The shift holds if liquidity concerns persist and strong equity returns keep funding direct deals. It reverses if private debt yields stay attractive while direct deals tie up capital longer than expected. Next year's report will show whether offices acted on the plan, which they failed to do on geography this year.