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The cornerstone of legacy: Family governance in India's billionaire boom

Why Jersey is the ideal partner in securing India's family business legacy

Published: Mar 10, 2024 01:17:15 PM IST
Updated: Mar 11, 2024 01:18:12 PM IST

The cornerstone of legacy: Family governance in India's billionaire boomFaizal Bhana, Director – Middle East, Africa and India, Jersey Finance

India's economic ascent is woven into the tapestry of its thriving family businesses. These enterprises, nurtured across generations, are not just drivers of wealth but custodians of tradition, heritage, and national pride. As India witnesses a surge in ultra-high net worth (UHNW) families and billionaire households, ensuring the sustainability and success of these businesses demands special attention, support structures and robust framework: family governance.

The significance of family governance cannot be overstated. For the families behind India's industrial empires, navigating the complexities of wealth management, succession planning, and maintaining familial harmony requires a structured approach. This is where Jersey, an award-winning international finance centre (IFC), emerges as a strategic partner, offering its expertise and innovative solutions and decades of experience and expertise from supporting global families to help and assist in safeguarding the legacy of Indian UHNW families.

Safeguarding the legacy

The burgeoning ranks of India's UHNW community paints a compelling picture. With an estimated 300 family offices managing an average of US$100 million each, and the number of US-dollar millionaires projected to double by 2026, the need for sophisticated wealth management strategies is undeniable1. This growth is further fueled by the presence of 166 billionaires and the third-highest number of centi-millionaires globally, showcasing the sheer scale of wealth concentrated within Indian families.2

However, with great wealth comes the need to exercise great responsibility. Disparate branches within families, coupled with a lack of communication and transparency, can sow the seeds of discord. Formalising information-sharing and decision-making processes through family governance programs is crucial, preventing discord and ensuring the smooth transition of wealth and leadership across generations. Embedding an adequate governance framework within the family takes time, requires buy-in from all of the family, top to bottom and commands personal responsibility for each family member.

For more than 60 years, Jersey’s IFC and its award-winning financial services industry has been at the forefront of advising UHNW families on family governance best practices, across the globe, including Indian families. Throughout 2023, we have actively engaged in fostering dialogue on this critical topic. Our report on emerging Saudi Arabian family business leaders revealed the challenges and opportunities they face in the context of wealth transfer and future sustainability. Similarly, our initiatives in Africa highlighted Jersey's private wealth and funds propositions, tailored to meet the specific needs of family businesses in the region.

But why Jersey? The Island nation offers a unique blend of advantages. The quality of expertise found in Jersey is unparalleled, with almost 14,000 financial services professionals adept at navigating the intricacies of family governance. Our diverse range of flexible legal structures can be adapted to suit the specific values and philanthropic ventures of each family. Moreover, Jersey's unwavering political and economic stability provides a secure haven for generations to come.

Beyond these tangible benefits lies Jersey's deep understanding of the unique cultural nuances of family businesses in India. We recognise the importance of balancing tradition with modern best practices, ensuring seamless integration of family values into governance frameworks. This resonates with the findings of our recent Saudi ‘NextGen’ research, which emphasizes the desire among younger generations in Saudi Arabian family businesses to have greater involvement, a voice, in shaping the future of their enterprises.

Beyond wealth: integrating ESG and impact

Integrating environmental, social, and governance (ESG) principles into family governance is another rising trend. Families increasingly seek to align their wealth with their values, driving investments towards sustainable and impactful ventures. ESG-focused initiatives are familiar to Jersey firms. Take, for example, the Standard Chartered case study, in which its Jersey-based professionals recommended a comprehensive and bespoke ESG framework for a leading, high-net worth business owner of Indian nationality. Experts at the bank navigated complex cross-border conditions to successfully deliver on the client’s desired returns, which led to the client doubling their assets under management with Standard Chartered Private Bank.

Furthermore, Jersey Finance's new SDG alignment tool empowers finance firms to channel private capital towards the UN's Sustainable Development Goals (SDGs). This aligns perfectly with the growing interest in impact investing and philanthropy among Indian UHNW families. Integration of these elements within family governance programs paves the way for a future where wealth creation goes hand-in-hand with positive societal impact.

A future built on collaboration

Family businesses are the bedrock of India's economic might. As the nation continues and substantially grows this exciting chapter of wealth creation, Jersey’s IFC stands as a trusted partner, offering a vast and diverse pool of expertise, forward-thinking solutions, and unwavering support to ensure the continued success and sustainability of these family empires. By embracing family governance, integrating ESG principles, and aligning wealth with purpose, Indian UHNW families can not only protect their legacy but also shape a brighter future for generations to come. Jersey is ready to walk alongside them on this journey bringing with its decades of experience and expertise every step of the way.

1 Global Wealth Report – Credit Suisse (credit-suisse.com)

2 Empaxis - Investment Operations with Real Results

3 Jersey Finance Report Reveals Optimistic Outlook for Emerging Saudi Arabian Family Business Leaders | News | Jersey Finance

4 Charting the Future: Mapping Next Generation Preparedness, Involvement, and Aspirations in Saudi Arabian Family Businesses | Our Work | Jersey Finance

5 https://www.jerseyfinance.je/events/lunch-and-learn-session-on-un-sustainable-development-goals-sdgs/ 

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