Latest news with #InsideWealth
CNBC
2 hours ago
- Business
- CNBC
Family office deal-making has fallen this year as investors wait for clarity
A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox. Investment firms of the ultra wealthy are known for their patience, preferring to invest for decades or even generations. Family office investors have also shown they are willing to wait for the dust to settle on President Donald Trump 's tariffs before inking new deals. In the first six months of 2025, family offices made 375 direct investments in companies, a 32% year-over-year drop, according to data provided exclusively to CNBC by Fintrx. Investments fell in every sector, including technology and health care and life sciences, the two most popular deal categories in 2024 and 2025, according to Fintrx, a private wealth intelligence platform. Only artificial intelligence-related companies saw a growth in direct investments, which rose from 55 to 71. However, family offices are showing more discretion when it comes to betting on AI, according to PwC's Jonathan Flack, who leads the consulting giant's U.S. and global family office practice. Family offices, especially those that are less comfortable with technology investing, are taking a picks and shovels approach by investing in the infrastructure around AI, he said. "They are actually making investments in the data centers and the hard assets that are going to be needed to support AI and the growth of AI," Flack said. Health-care investing is somewhat resilient, between the demands on the health-care system and the rise of AI-enabled biotech startups, he said. For instance, he said, medical diagnostics startups have great potential given the expected cuts as Trump's tax-and-spending law is expected to put pressure on rural health care. Broadly speaking, family offices have become choosier about their venture capital investments, according to Vicki Odette, a lawyer who advises family offices, funds and institutional investors. The exit slowdown means they have less capital to redeploy, she said. "I'm just seeing a lot more scrutiny," said Odette, a partner at Haynes Boone. "They're really looking for deals where they can actually see, in the near term, much more of a profitable path." That said, her clients aren't sitting idly on the sidelines. Opportunistic family offices are showing interest in secondary funds, which have surged in popularity as institutional investors seek liquidity, she said. Whether deal-making will rebound by the end of the year is another question of patience. Flack said he expects deal-making not to recover, but to rise slightly in the second half of 2025. "I still see where there's a outsized percentage of undeployed capital at family offices," he said. "I think that as you get towards the end of this year, they're going to want to get into some deals." Odette said family offices would need more clarity on tariffs in order for investments in U.S. firms to meaningfully pick up. However, she has seen a recent shift in family offices, even domestic ones, looking overseas, and she expects that to last. "Most of the deals that we're seeing are really focused in in Europe and abroad," she said. "We're seeing a lot of family offices build more cross-border syndicates, where they're all talking to each other to look for new sources of alpha that are outside the U.S."
CNBC
3 days ago
- Business
- CNBC
LVMH-backed investor group takes 20% stake in private jet company FlexJet
An investment group led by LVMH's private equity arm is buying 20% of private jet company FlexJet, marking the latest push by the luxury industry to expand into travel. L Catterton, the private equity firm backed French luxury giant LVMH, is leading an $800 million investment in FlexJet that will also include brand partnerships and collaborations. The investment group also includes affiliates of KSL Capital Partners and the J Safra Group. FlexJet will continue to be controlled by parent company Directional Aviation Capital. The deal highlights the luxury industry's rapid expansion into the experience economy as wealthy consumers increase their spending on travel, dining and special events. LVMH acquired hospitality group Belmond in 2018 for $3.2 billion, and has been building out its Cheval Blanc and Bulgari hotel and resort brands. Global sales of luxury goods declined 2% last year to 363 billion euros as demand from Gen Z and Chinese consumers fell, according to a report from Bain and Altagamma. Luxury hospitality, however, grew by 4%, while gourmet food and fine dining surged 8% and sales of yachts and private jets grew 13%. For Cleveland-based FlexJet, the deal creates a relationship with the world's largest luxury giant and its portfolio of more than 75 coveted brands, from Louis Vuitton and Dior to Dom Perignon and Tiffany. With the private-jet industry becoming increasingly competitive and dominated by industry leader NetJets, FlexJet aims to be more like an exclusive membership club, offering luxury experiences and bespoke services. FlexJet already has partnerships with Belmond, yacht maker Ferretti Group and Bentley Motors, collaborating on jet interiors and curated events. The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them. Subscribe here to get access today. "We have been trying to move Flexjet into an experiential role," said Kenn Ricci, chairman of FlexJet and principal of Directional Aviation. "If you think about luxury travel and where it is today, I keep thinking about a FlexJet community. When you have an experience at a hotel, you get to have it for a week, and you get to know what that experience is. But when you fly on a jet, it happens four hours, five hours. So how do we create that FlexJet community?" Ricci said most of the proceeds of the deal will go to expanding and improving FlexJet's infrastructure. That includes buying larger, long-range planes to fill rapidly growing demand for international travel. The company will also build up its infrastructure overseas, with added maintenance facilities and ground handling. And FlexJet will continue adding and training flight crew through its special cabin attendant academy. About 25% of the proceeds will be used to pay a special dividend to shareholders. Ricci said FlexJet is projecting EBITDA of about $425 million this year, up from $398 million in 2024 and more than double the levels in 2020. The company offers fractional ownership and leasing options, as well as jet cards. Its fleet of 318 aircraft is expected to reach 340 by the end of 2025, and it has over 2,000 FlexJet members under the fractional and leasing program, according to the company. Ricci said L Catterton approached FlexJet with the potential deal as the private equity firm seeks to stay ahead of the changing definitions of luxury among the wealthy. "(L Catterton) presented us some ideas about where they see the future of luxury," Ricci said. "They basically see that the luxury of the future is time. And they see that in private travel, you can recoup time." Ricci said the details of potential brand partnerships or collaborations have yet to be announced. But he cited as a model FlexJet's partnership with Belmond, which includes special deals and enhanced stays at the company's luxury hotels in Venice and Ravello, Italy; and Mallorca, Spain, as well as other locations. He said the company's bespoke aircraft cabins, modeled after individually designed rooms at the best hotels, would also continue to be a competitive advantage. "When faced with a behemoth like NetJets, we don't need to be the largest," he said. "We want to be the boutique." L Catterton is 40% owned by LVMH and the family office of CEO Bernard Arnault. It manages $37 billion in equity capital across consumer brands including Birkenstock, Thorne and ETRO. Scott Dahnke, global CEO of L Catterton, said in a statement FlexJet's history "is one of never settling in pursuit of thoughtful innovation to best fulfill the desires of the consumers within their unique and exciting marketplace."
CNBC
17-07-2025
- Business
- CNBC
New York City braces for wealth flight with Mamdani's political rise
Zohran Mamdani's primary win in New York City's mayoral race and proposal to raise taxes on millionaires have touched off fears of a new wave of wealth flight from the city. Yet so far, there is little evidence of a slowdown in high-end real estate or real wealth losses in New York. Florida real estate brokers say they've seen a surge in inquiries from the New York wealthy looking to move to Miami or Palm Beach. Business owners are threatening to leave the city or close. And New York developers, caught in the crosshairs of Mamdani's rent control platform, have banded together to fund Mamdani's opponents in the November general election. At the center of the economic concern is Mamdani's so-called "millionaire tax." He's proposed an additional 2% tax on New Yorkers earning more than $1 million a year. Added to the city's current top rate of 3.876%, the tax would bring the combined New York City and state tax to 16.776%, by far the highest in the country. The combined federal, state and city rate would be 53.776%. And New York's high earners won't have to go to Florida to avoid the tax. They can simply move to neighboring Long Island or Westchester County or even New Jersey. Unlike New York state, New York City can't tax people who work in the city but have their primary residence elsewhere. "New York City can only tax its own residents," said Jared Walczak, vice president of state projects at the Tax Foundation. "A high earner doesn't need to give up the convenience of the city, they just need to move outside the five boroughs. Migration across city lines is the easiest." Importantly, Mamdani wouldn't be able to raise income taxes. The city's income tax rates are set by Albany, where Gov. Kathy Hochul has said she will block any tax hike. "I don't want to lose any more people to Palm Beach," Hochul told the New York Post. Critics also fear Mamdani's policies toward the police and public safety could make the city even more dangerous, becoming the final straw for many business owners and top earners who were already considering leaving. The top 1% of New Yorkers pay over 40% of the income taxes, so losing even a small number of high earners would set off a downward spiral of lower revenue and lower services and more out-migration. The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them. Subscribe here to get access today. New York state had a net loss of $14 billion in net adjusted income due to taxpayers leaving between 2021 and 2022, according to the Tax Foundation and IRS data. The city's revenue from personal income taxes declined between 2022 and 2024, from $16.7 billion in 2022 to $14 billion last year — although they're still above the pre-Covid levels of $13.4 billion in 2019, according to data from the New York City comptroller. At the same time, however, there are signs that New York's powerful wealth machine is constantly replenishing the ranks of millionaires and billionaires, more than making up for the rich who move out. The number of millionaires in New York City has more than doubled over the past decade — despite the Covid losses — to over 2.4 million, according to Altrata. There are now over 33,000 New Yorkers worth $30 million or more, nearly double that of Miami, according to Altrata. Whether it's measuring millionaires, multi-millionaires or billionaires, New York City has maintained its dominance as the richest wealth hub in the world. "New York remains a powerful magnet for the wealthy, offering a blend of luxury consumption, vibrant culture, high-quality education and lifestyle cachet, with the borough of Manhattan the epicenter of ultra-prime real estate," said a report from Altrata and REALM. Demand for pricey luxury apartments in New York also shows no signs of slowing, even after Mamdani's win in the June 24 primary. There were 64 contracts signed between June 23 and July 13 for apartments priced over $4 million, up 13% over last year, with a sales total of more more than $555 million in sales, according to Olshan Realty. Among the signed contracts was a $35 million, three-bedroom spread on Fifth Avenue that was first listed in December. "The luxury market is on pace for one of its best years," said Donna Olshan, of Olshan Realty, who also cautioned that any potential Mamdani-related weakness could show up in the Fall. Not only did New York's millionaire and billionaire population rebound quickly after Covid, but high earners also bounced back. While the city lost a net 5,000 households earning $1 million or more during the pandemic, their ranks have grown from 30,400 in 2019 to 34,127 in 2022, the latest period available, according to the Fiscal Policy Institute. Nathan Gusdorf, executive director of the Fiscal Policy Institute, said the narrative of wealth flight from New York is fed in part by the media, which highlights a small number of high-profile billionaires who move from New York to Florida. Stories about billionaires like Josh Harris, Carl Icahn and Daniel Och decamping to Florida ignores the broader ebb and flow of wealth in New York. New York's powerful economy, fueled by the financial services industry, continues to produce more new millionaires than it loses. "We do not have a fixed population of millionaires that just declines whenever one of them leaves," Gusdorf said. "The city regenerates that lost millionaire population." Even if Mamdani were to win the mayorship in November and raise taxes, the direct impact on wealth flight may be more limited than many expect. According to the Fiscal Policy Center's latest research, the top 1% of New Yorkers by income (those making more than $800,000 a year) leave the city at one quarter the rate of all other income groups. When the New York wealthy do move, they have most often oved to other high-tax states like New Jersey, Connecticut or California – suggesting lifestyle rather than taxes are the driver. "There is a strong indication that higher tax rates at the state level imposed on the top earners are not having real behavioral effects," Gusdorf said. Others, however, say taxes have outsized importance for the wealthy, proven by the sweeping population moves in recent years from high-tax to low- or no-tax states like Florida and Texas. A study by the California Center for Jobs and the Economy described a "taxodus," or net loss of $5.3 billion in personal income tax, from high earners who left after a 2016 extension of higher taxes on the wealthy. "High tax rates do lead to outmigration and lower income growth," Walczak said.
CNBC
14-07-2025
- Business
- CNBC
Tax cuts for private jet buyers expected to lead to surge in sales
The new federal spending bill is expected to boost sales of private jets, as owners take advantage of faster write-offs of the purchase price. Jet brokers and advisors said they've seen a burst of activity from clients who were holding off on purchases until the bill was signed. Among its many new tax provisions is the reinstatement of "bonus depreciation," which allows businesses to immediately write off 100% of the purchase price of capital equipment, including private jets. Individuals, who typically own a jet through their private business or holding company, can now write off the entire cost of a new or used jet in the first year of ownership for any plane placed into service in or after Jan. 19, 2025. The tax benefit only applies to business jets, not jets used for personal use. It revives a provision of the 2017 tax cuts and replaces the current phased-out depreciation percentages of 60% in 2024 and 40% in 2025. "We've had a number of owners who were looking to upgrade and have been waiting for this," said Barry Shevlin, CEO of FlyUSA, the aviation solutions company. "And I have at least a half-dozen others who are looking to buy after this was passed." The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them. Subscribe here to get access today. The tax stimulus comes at just the right time for the private jet industry, which has seen a slowdown in growth from its feverish pitch in 2020 and 2021. The industry saw a surge in new owners, charter fliers and fractional owners after Covid, but many of the wealthy who bought planes then for the first time have started selling them or moving to fractional ownership due to higher-than expected maintenance and pilot costs. The number of pre-owned business jets for sale increased to an average monthly rate of over 1,800 in the first half, according to JetNet. That's up from 1,744 in the first half of 2024. The average time on market has also increased, to 418 days from 386 days, the data firm said. "During Covid, a lot of the people who bought planes didn't know what they were getting into," Shevlin said. "They were shocked by what it cost and what it involved." Philip Rushton, founder and president of Aviatrade, said there are now around 23 to 25 Gulfstream G650ERs on the market, which is slightly higher than usual. "It's certainly normalized after Covid," he said. The big rush to buy private jets, however, may not start until the fall. Brokers said private jet purchases typically spike at the end of the year, when companies and individuals are finalizing their tax bills. Matt Walter, managing partner at Guardian Jet, said the ultra-wealthy won't decide to buy a plane just because of a tax change. "But it certainly helps that decision," he said. "If you planned to upgrade your plane in 12 months, maybe you do it in six months instead." He said he's advising clients to buy before September but sell after September, because demand will likely surge in the fall. "You want to buy before it gets crazy," he said. "After September, you're going to be competing with other buyers and also competing for inspection slots. In a heated market, everyone is going to be trying to do the same thing and trying to find inspection slots."
CNBC
10-07-2025
- Business
- CNBC
How family offices are betting on the sports boom from fantasy apps to pickleball courts
A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox. 2025 has been a banner year for sports mergers and acquisitions. In June, billionaire and Guggenheim Partners CEO Mark Walter bought a majority stake in the Los Angeles Lakers at a record $10 billion valuation. That same month, Apollo's Josh Harris and Blackstone's David Blitzer picked up a new Philadelphia WNBA team for $250 million through their titular sports and entertainment company. While sports team ownership changes get most of the buzz, ultra-rich individuals and their private investment firms are taking multiple tacks to profit from the sports industry. BNY Mellon's recent family office survey found that 33% of 282 respondents had invested in sports. BNY Mellon CIO Sinead Colton Grant told CNBC in June that family offices were increasingly investing in sports assets as an inflation hedge. Moreover, while larger family offices were more likely to have sizable equity stakes in teams, investors are also drawn to sports-related assets like merchandise and hospitality venues. "You've got media rights in addition to broader franchise interest. You've got real estate, like the broader complex around the stadium," she said. "There are many strands that are coming together to provide that, that quasi-inflation hedge." Investing in the picks and shovels of sports also comes with a lower barrier to entry. Betting on a strength-training app or buying a ski resort costs a fraction of what it takes to buy an equity stake in a multibillion-dollar sports team. While many family offices are agnostic when it comes to specific sports, the Chaifetz Group has built a pickleball portfolio. Launched by Richard Chaifetz, the founder of employee resource giant ComPsych, the Chicago-based family office not only owns pickleball team St. Louis Shock but also has invested in at least four pickleball-centric companies including Pickletile, a pickleball court construction company, and DUPR, which provides live ratings of pickleball matches. Billionaire Blitzer, the first person to own equity in all five major men's U.S. sports leagues, has invested in a slew of sports startups this year including Fantasy Life, a sports betting media firm, and Ballers, a chain of social clubs for racket sports. Blitzer told CNBC in 2023 that sports teams hold their value due to limited supply, while yielding related investment opportunities. "They're not making any more of them, and they're growing," he said at that year's CNBC x Boardroom Game Plan summit. "They're not just growing on their existing fan base. They're creating new fans for creating new revenue streams."
