EQT Notes Shift in Asian Family Offices Towards Diversification and Flexibility

According to the South China Morning Post, EQT, one of the world's largest private markets firms, is observing a growing emphasis on flexibility and diversification among family offices. While some financial analysts and wealth managers have suggested that the second and third generations of family offices in Asia are moving away from the fundamental principles that aided the accumulation of their initial assets, the South China Morning Post notes this is not entirely accurate. Instead, these investors are assessing available opportunities and adjusting their portfolios to achieve a preferred balance between risk and reward, similar to how the founding generation operated. However, the range of options available to them has changed significantly over the past couple of decades.

Previously, the typical focus involved generating returns through property, listed equities, and direct business holdings before passing on those assets. Currently, in alignment with contemporary trends, there is a much greater focus on international diversification, flexible time horizons, flexible structures, and active ownership, all while maintaining a cautious, long-term investment approach. Sueann Yeo, managing director and head of Asia-Pacific global wealth solutions for EQT, stated that in their interactions with family offices, they perceive a slight difference in how the second and third generations approach wealth management. She further noted that the mindset and expectations regarding capital preservation, growth, and returns for younger investors in their 20s to 40s differ from those of individuals in their 60s or 70s, leading many younger generations to consider private equity, infrastructure, alternative investments, and various asset-allocation strategies.

Yeo mentioned that while some more institutionalized family offices have been pursuing this for some time, many others are now establishing programs to substantially increase their allocations to these newer areas over a five- to 10-year period. Secondaries have transitioned from being a niche strategy to a core portfolio management tool for family offices, rather than merely an alternative route to private equity exposure. Global secondaries transaction volumes reached a record US$226 billion in 2025, representing a 41 per cent year-on-year increase, with momentum continuing into the current year as first-half volumes surpassed US$120 billion, marking a 20 per cent year-on-year rise.

Yeo explained that secondaries and primary commitments are complementary, with secondaries offering an additional means to access private markets that possess distinct cash-flow profiles, broader diversification, and differentiated portfolio characteristics, rather than being framed as a faster-return alternative to primary commitments. She attributed this shift to several factors, including an increasing level of sophistication in understanding private assets, greater attention to DPI (distributed to paid-in capital, a metric for measuring cash returned to investors relative to invested capital), and a more hands-on approach to strategic asset allocation and setting limits for each category.

EQT utilizes the Wallenberg model as a reference for its investment methodology, a model centered on patient, multi-generational capital, active support for portfolio companies, and reinvestment of returns to sustain long-term growth. Yeo suggested this long-term, engaged ownership style provides a useful framework for Asia's family offices as they consider balancing risk and opportunity across generations. This evergreen approach allows eligible individual investors and family offices to participate in strategies previously accessible only to institutions. It permits investment in private equity without the operational complexity associated with managing capital calls, distributions, and reinvestment decisions typical of close-end structures, while still offering more flexible, albeit not unlimited, access to liquidity.

Yeo commented that family offices are becoming more receptive to evergreen structures, which resemble the content of classic closed-end private equity structures for institutional investors but with added flexibility. EQT's private wealth strategies incorporate a combination of primary funds, co-investment deals, and a cash portion with a soft lock period to manage liquidity. Eligible investors benefit from immediate deployment and exposure to a diversified portfolio from the outset, without the necessity of constant involvement or decision-making.

Yeo highlighted that this is just one option within the EQT Private Wealth platform, which embodies the principle of active ownership to generate value for the private companies in its portfolio. This involves concentrating on governance and judiciously employing appropriate levers to enhance operating performance and revenue, without resorting to the type of management overhauls often seen elsewhere. She noted that publicly and privately managed companies differ significantly in their reporting methods, shareholder accountability, and time horizons, stating that when EQT takes a controlling interest, the objective is to create value over the long term.

More broadly, Yeo pointed out that while Asia accounts for approximately 60 per cent of global gross domestic product growth according to a 2025 IMF figure, buyout assets under management in the region are estimated to be less than 10 per cent, indicating substantial potential. She observed that some investors have historically focused solely on US markets they are familiar with, but pointed out that growth is originating in Asia, and there is less capital pursuing quality assets in the region, presenting an interesting opportunity for private equity.

The commitment to long-term capital extends to EQT's involvement with earlier-stage entrepreneurs, as demonstrated by the EQT Impact Challenge start-up pitch competition, which concluded in Hong Kong for the second consecutive year. The most recent competition received over 200 submissions from young businesses developing deep-tech solutions in the climate and health sectors. Five finalists were chosen to present their start-ups live at the Grand Finale at M+ in Hong Kong earlier this month, where they were evaluated on their capacity to transform highly technical concepts into commercializable and scalable products. Advent Gene Therapeutics, which employs artificial intelligence to create next-generation viral vectors for safer, more precise, and effective delivery of genetic medicines, was named this year's winner. The EQT Foundation, the investment firm's philanthropic arm, provided Advent Gene Therapeutics with a €500,000 (US$575,000) investment, in addition to access to EQT's global network, expertise, and support. Jean Eric Salata, chair of EQT Group and a member of the judging panel, stated that the finale offered a close look at the founders' ambition and the potential of their technologies, emphasizing the goal of focusing on companies that can act as catalysts for genuine change and impact. A key takeaway from the event was that capital alone is seldom enough to help promising technologies reach their full potential; the finale reflected a broader theme in private markets discussions: the importance of patient capital combined with active, long-term support to foster conditions for sustainable growth.