While institutional investors, global Private Equity (‘PE’) giants, and Venture Capital (‘VC’) funds continue to capture most of the direct investment market, over the past few years, a formidable new class of investor has emerged from the nation’s booming wealth, the Family Office. The rise of the direct investments by Indian Family Office has stemmed from India’s consistent and steady economic growth, the increasing maturity of its capital markets, and very successful exits of founders and investors in the recent past. Family Offices deploy an attractive pool of patient, long-term domestic capital into India's private markets and are targeting high-growth sectors, focused on preserving and creating wealth across multiple generations.
Distinction from Traditional PE Funds:
The key differentiator between a traditional institutional PE funds and an investment by a Family Office is the latter’s perpetual capital and long-term, flexible investment horizon. PE funds operate on fixed cycles that are typically around ten years long and are driven by the obligation to return capital to their contributors and limited partners. On the other hand, Family Offices do not face such constraints. Their core mandate is to preserve and compound wealth during a duration that may span over multiple decades. This enables them to serve as patient, strategic partners for Indian businesses that require long gestation periods, including, infrastructure, renewable energy, health care and life sciences, advanced technology, and manufacturing. Interestingly, having newer generation at helms of decision making has also increased the risk appetite for Family Offices. Consequently, Family Offices are increasingly being seen as an essential pillar in financing the private sector’s long-term structural growth.
Single and Multi-Family Offices:
Family Offices in India have generally taken the structural form of either a Single-Family Office or that of a Multi-Family Office.
A Single-Family Office dedicatedly manages the wealth and affairs of one family, providing focused investment strategies, high-touch services, and full control over decision-making. It offers maximum privacy and alignment with the family’s values but is costly to operate, making it suitable primarily for ultra-wealthy families. Some of the prominent Single-Family Offices in India include names like PremjiInvest, Catamaran Ventures, and Burman Family Holdings.
In contrast, a Multi-Family Office supports multiple families under a shared platform, offering institutional-quality investment management, estate planning, and administrative services at a more efficient cost. A Multi-Family Office provides access to a broad range of expertise and resources without the need for families to build and run their own dedicated office. Some of notable Multi-Family Offices in India include Waterfield Advisors and Acquitas Capital Advisors.
Organisational Structure and Investment Vehicles:
Indian Family Offices, depending upon their inclination on matters of governance, taxation, and regulatory compliance, usually model their organization under the following two major legal structures:
1. Private Limited Companies and Limited Liability Partnerships:
The simplest and most commonly adopted structure for a Family Office in India involves establishing a private limited company under the Indian Companies Act, 2013 (‘CA 2013’) or a limited liability partnership (‘LLP’) under the Limited Liability Partnership Act, 2008 that serves as the family’s proprietary holding and investment entity.
One of the strongest advantages of this model is the high degree of control and confidentiality it affords. A privately held entity is not subject to the stringent disclosure requirements applicable to regulated investment funds, enabling the family to keep its financial strategies, investment allocations, and commercial intent largely confidential. Further, a tightly controlled management provides strong operational alignment with the family’s primary business interests and allows strategic investments that directly support core business priorities. If investments are purported to be focused in a sector where the family has expertise and access to market share, this enables seamless knowledge transfer to an investee company.
However, these benefits come with legal and tax implications that warrant careful consideration. In terms of taxation, private companies do not enjoy the pass-through benefits available to certain fund structures such as Alternative Investment Funds (‘AIFs’). Corporate income is taxed at the organization level, with dividends distributed by private companies being taxed again in hands of shareholders. From a governance standpoint, while both companies and LLPs provide limited liability protection, the direct-investment nature of this setup means that the Family Office’s board representatives on portfolio companies will assume fiduciary responsibilities as well as related liabilities.
2. Alternative Investment Funds
Family Offices may also choose to structure themselves as AIFs under the SEBI (Alternative Investment Funds) Regulations, 2012. AIFs can be established in various legal forms, including a trust, a Company, or an LLP.
One of the prominent advantages of AIFs is the tax pass-through at fund level, particularly for Category I and II AIFs. Further, Family Offices can strategically choose the AIF category that aligns with their investment objectives, with focus of Category I AIFs being venture capital, infrastructure, and socially beneficial sectors, while that of Category II AIFs being equity or debt investments. Additionally, operating as a SEBI registered entity provides regulatory comfort to investors and counterparties, as such funds must adhere to defined valuation norms, reporting standards, and governance practices.
However, AIFs are also bound by legal mandates that may be perceived as cause of operational challenges. Some of the compliance requirements for AIFs include a minimum investor contribution, periodic reporting and disclosures to SEBI, mandated investment limits per company, and statutory lock-in periods. While SEBI has, in its press release dated 3 October 2025, negated reports of it considering specific regulatory oversight of Family Offices, the boundaries of exemption from legal scrutiny may still be subject to interpretation, especially in light of requirements that may be currently applicable owing to a Family Office’s legal structure.
Rights as an Investor
The foundation of any private equity investment, especially for minority stakes, lies in robust legal documentation that protects the investor’s rights. Shareholder Agreements (‘SHA’) and Articles of Association (‘AoA’) are of pivotal significance in this. The SHA governs the relationship between the Family Office, founders, other shareholders, and the investee company, while the AoA, as the investee company’s constitutional document, must align with the SHA to ensure enforceability.
Family Offices typically negotiate veto rights over strategic decisions such as changes to business plans, major capital expenditures, related-party transactions, or modifications to the constitutional documents. Next, while tag-along rights facilitate orderly exits alongside other shareholders, mechanisms in form of put and call options, and drag-along rights allow the Family Offices to sell or acquire shares under agreed conditions, especially in situations of major non-compliances, breaches, mismanagements, and defaults.
Family Offices may also nominate directors to the investee company’s board, but these nominees owe fiduciary duties to the company, requiring careful navigation of conflicts between its own interests and the investee company’s best interests under the CA 2013.
If Family Offices are set up in jurisdictions outside India that offer operational and tax incentives, their investments in India will be treated as foreign direct investment, requiring compliance with sectoral caps, pricing guidelines, and reporting requirements. On the other hand, if investments are made by Family Offices in India into overseas jurisdictions, requirements of overseas investments, including threshold of investments as percentage of net worth, arms’ length pricing and valuation, and necessary form filings require compulsory conformity.
Family Investment Funds in GIFT City
The Government has enabled creation of Family Investment Funds (‘FIFs’) at the Gujarat International Finance Tech-city (GIFT City). FIFs are self-managed vehicles, and can be established as a company, contributory trust, or limited liability partnership under the International Financial Services Centre (IFSC) framework. They allow a single family to pool and manage both domestic and global assets while benefiting from minimal regulatory regime, exemptions from several SEBI norms applicable to standard AIFs, and significant tax incentives. FIFs are mandated to have a minimum corpus of USD 10 million within three years from obtaining certificate of registration, making them an attractive structure for Indian families seeking regulatory clarity and cross-border flexibility.
Conclusion
The emergence of Indian Family Offices as direct investors has marked a substantive shift in the India’s private markets. Beyond traditional investments, many Family Offices are increasingly infusing capital as well as know-how into innovative startups, reflecting a strategic diversification of their portfolios. Their patient domestic capital is playing a pivotal role in financing India’s key growth sectors, establishing Family Offices as a cornerstone of private sector development.
As their influence expands, the question arises whether SEBI will introduce a dedicated regulatory framework to oversee Family Offices as distinct investment vehicles. In the meantime, these offices continue to drive India’s growth trajectory, blending wealth preservation with strategic nation-building.
[The author is an Associate Partner in Corporate and M&A practice at Lakshmikumaran & Sridharan Attorneys, Hyderabad]
