(Bloomberg Markets) — Peppermint Grove, a suburb of Perth in Western Australia, has all the amenities you’d expect from the country’s wealthiest postcode: sprawling riverside mansions, luxury schools and a yacht club.
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But recently there are new signs that Perth’s elite are beginning to cross the line that separates the merely wealthy from the ultra-wealthy: take a quick look into an estate agent’s window and you’ll see properties frequently advertised with the distinctive phrase “Ideal for Family Offices.”
Financial hubs such as Dubai, London, New York and Singapore have long dominated the rarefied world of family offices, organisations that provide services such as money management, taxes, charitable giving and even household help to a single client, usually with assets of more than $100 million.
As the wealthy gain more wealth, the number of family offices around the world has more than tripled since 2019, reaching about 4,600 last year, according to investment data provider Preqin.
But the wealthy don’t just live in the world’s glitzy cities: family offices are now popping up in places like Perth, on the Indian Ocean coast, 1,300 miles from the nearest metropolitan area, Adelaide, and closer to Jakarta than Sydney.
After almost two decades of mining boom, Perth, a city of just over two million people, is home to 64 million-plus residents – making it one of the world’s wealthiest cities on this measure, tied with Stockholm and ahead of Berlin and Dublin, according to data from citizenship consultancy Henley & Partners.
Andrew Forrest and his family topped Australia’s rich list with a fortune of $29.2 billion as of mid-May, according to the Bloomberg Billionaires Index. Forrest grew up in the outback and founded the Perth-based iron-ore mining company Fortescue.
Andrew and Nicola Forrest call their family office “Tatalan.” The office invests in public and private companies and works with their charity, the Minderoo Foundation. (The couple announced they would separate in 2023 but said their joint venture would not be affected.) Tatalan’s “bespoke model” has helped its founders fund “strong, sustainable businesses in the sectors where they believe they will have the most significant impact, including renewable energy, critical minerals, agri-food and health tech,” a spokesman said.
Other wealthy families are less well known but have made their name selling tools to miners and other companies, helping the mining sector more than double in size since 2000 to account for 13 percent of Australia’s gross domestic product.
Sean Parkin, who helps families set up and manage their offices, says he’s worked with or met with more than 20 of these companies, each with more than A$200 million (US$131 million) in assets under management. “A lot of the people I’ve met had no idea these wealthy people existed,” says Parkin, co-founder of local consulting firm Whole Road Services. “Most people probably don’t either.”
Family offices have universal appeal — they typically have minimal disclosure requirements and allow the wealthy to exercise tight control — but in Perth they have an added draw: Many locals have a deep-seated suspicion of outsiders, including undoubtedly the heads of big global asset managers looking to manage their money from far away.
Consider Perth-born Rod Jones, founder of education company Navitas. It was no secret that Jones needed asset management after Navitas was acquired by a group led by private equity firm BGH for A$2.1 billion in 2019. But Jones was so fed up with the countless calls he received from far-flung professionals offering him deals and managing their assets that he half-jokingly told one: “Look, I’ll give you $200,000 if you go away.”
Instead, Mr. Jones founded Hope Ridge Capital, a five-person family office that also invests in blue-chip stocks but focuses primarily on direct holdings, including private credit.
“I’m someone who enjoys the rat race of being in the business and putting in the time and effort to pick good opportunities and get behind them,” he says, with little interest in boilerplate sales pitches. “To invest with someone, I have to meet them, understand them, get to know them and feel comfortable around them.”
Other Western Australian family offices also crave familiarity, many of which are clustered within walking distance of each other in the upscale “Golden Triangle” that lies between the Swan River and the coast.
Emilio Pagano, CEO of the Lance East office, said he regularly talks with more than a dozen colleagues about long-term investments that appeal to their clients’ entrepreneurial ambitions. Lance East manages the finances and philanthropy of Laurence Escalante, founder of privately held online gambling company VGW Holdings Inc., whose personal fortune is about $2 billion, according to the Bloomberg Billionaires Index.
Pagano says family office clients are often risk-averse thanks to Western Australia’s mining history. “Think about how mining happens,” he says. “You go from the most remote capital city in the world, into the middle of nowhere, and then you drive 300, 400, 500 kilometres across the desert to find mining assets and start drilling.”
Family office clients tend to have a higher tolerance for risk, thanks to Western Australia’s mining history.
Opportunities abound, but the remote location also brings challenges: Where can you find staff with the knowledge to compete and negotiate with the financial heavyweights? Perth has just 13,000 full-time financial services managers and specialists, compared with 108,000 in Sydney, according to census figures.
Family offices are typically run by a CEO or chief investment officer and about 10 staff members, and the chief executive officer tends to be someone who has worked in the founder’s business operations and is already a trusted adviser, according to people familiar with the matter.
A typical CEO salary ranges from A$396,001 to A$500,000, plus an annual bonus of 21 to 30 percent, according to a report by consulting firm KPMG and family-office recruiting firm Agreus Group — higher than their European counterparts but lower than in the U.S. (The report did not disclose salaries in Perth, but industry executives said they were broadly comparable.)
Parkin, the family-office adviser, says recruiting in Perth “has to be a bit more imaginative.” He often combs LinkedIn profiles for people who grew up or went to university in Perth who might be interested in returning. Parkin knows the transition well: After a finance job in London and a senior role with State Street Global Advisors in Sydney, he returned to his wife’s hometown of Perth to be closer to her family. The more relaxed lifestyle is also an attraction: In Perth, days often start and end early, and some of the world’s best beaches are just a short drive away.
But there’s another side to that pitch: Family offices deal directly with billionaires and multi-million dollar individuals, giving their advisers a bigger say in decision-making “that you probably wouldn’t have access to if you were at a large firm,” Parkin says.
The industry is now looking to the next generation. Today’s mining tycoons will one day pass on their businesses and fortunes to their children, and in a booming economy, opportunities in construction and services could produce the next generation of family office clients.
Agreus co-founder Tayyab Mohammed says the market has the potential to grow even bigger: “I wouldn’t be surprised to see Perth become a thriving ecosystem in a few years’ time.” —With Ben Staples in London
Mr Brampton is a Bloomberg News reporter in Sydney, Mr Hunt is a reporter in Melbourne and Mr Winters is a reporter in Singapore.
(Adds background information about Forrests in the 8th paragraph. An earlier version corrected the spelling of the company’s name in the 12th paragraph.)
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