Succession and Legacy Planning: The Indian Diaspora Family Offices Bridging Generations
When the multi-billionaire chairman of Reliance Industries, Mukesh Ambani, announced in late 2023 that three of his children would join the board of his multinational conglomerate, the move was widely seen as the first step in India’s “Great Succession.”[1]
Within the next 25 years, the owners of some of India’s largest companies will pass on as much as $4 trillion to their diaspora children—along with the reins of their businesses. This generational change in leadership marks an important moment for these families and for the company’s shareholders. [2] [3]
Ambani himself came of age after his father died without leaving a succession plan, which led to disagreements within the family over the future direction of the business.[4]
“We know about large families that have been left without proper wills and estate planning, which then leads to a lot of conflict and fights,” says Amit Patni, a Mumbai-based, third-generation member of the Patni family, and founder of RAAY Global Investments. “We’re now hearing more discussions about creating trusts and wills, and dividing wealth at an early stage."
Family businesses are the cornerstone of wealth in the Indian diaspora, but only a small proportion of them—roughly a fifth—have instituted a succession plan that identifies and develops a suitable leadership successor.[6] This is a problem, as the potential fallout from the generational wealth transfer set to take place among the UHNW Indian diaspora may impact not only the families at stake, but also the stability of their business empires.[7]
The question of succession has also gained currency in recent years, in response to major global events such as the war in Ukraine and the Covid-19 pandemic. The resulting geopolitical and macroeconomic risks from these events, as well as the threat they pose to familial wealth, has led 84% of UHNW Indians to reassess their approach to succession planning.[8]
“By creating a strong financial setup for my children without ceding 100% control, I’m creating an arm sling and future-proofing them,” says Adeeb Ahamed, managing director of LuLu Financial Holdings in Abu Dhabi.
As the family offices of the UHNW Indian diaspora prepare for the future, several trends are influencing their succession plans.
First, legacy planning for the next generation is triggering a move toward more formal governance structures like trusts and family offices.[9]
Arvind Tiku, the founder and group chairman of AT Capital, says he uses two trusts to manage the family’s portfolio of personal real estate and investments to ensure that his children will always have access to essentials like housing, regardless of what happens to the family business.
“We have a team of four or five people in Singapore who work with institutions like DBS Bank, our trustee bank, so that our business is managed professionally,” he says. “DBS Bank provides world-class banking and trust services which enable clients to leverage Singapore’s business friendly environment.”
Succession planning has long been at the core of the services provided by a well-managed family office. In particular, family office staff act as objective arbitrators committed to protecting a family’s best interests and bring professional expertise and a nuanced understanding of intrafamily dynamics to the table. This ensures families can pre-empt the risk of conflict and focus on preserving and growing their wealth.
The formal governance structures in many family offices also ensure that there are clear boundaries and communication lines to support decision-making and role assignation both inside and outside the family. They can also facilitate the separation of family wealth from business assets, a practice that is becoming increasingly common among UHNW Indians in the diaspora.
After the sale of Patni Computer Systems in 2011[10], Patni says his grandfather took the road less traveled and split the family’s assets from the operating company’s treasury. By using the funds to establish a family office, Patni says family members are able to explore entrepreneurial endeavors and investments beyond the existing business or traditional frameworks.
“What my father did was give everybody an equal share: his brothers, their children. Then, of course, it trickles down to my father's grandchildren. That is happening now for most of the families, where the next generation should know what they are getting, which makes it a very transparent and peer-based system,” Mr Patni explains.
Succession planning will only grow in importance amid a cultural shift in UHNW Indian families. The younger generations are often determined to pursue their own endeavors outside the family business and are moving the focus of their family offices to impact investments and emerging sectors in technology and sustainability.
Singapore-based managing director of Tolani Shipping, Rohet Tolani, says his children have chosen to reside in the US, with successful careers that are entirely separate from the family’s shipping interests. “I want my children to take the lead on developing their own motivations and their own passions,” he says.
Shruti Lohia Hora, daughter of entrepreneur and Indorama Corporation founder Sri Prakash Lohia, says she is grateful that the succession plan instituted by her father has enabled her to explore her own philanthropic projects.
Now the director of healthcare at Singapore-based Kindorama, a women- and children-focused healthcare business, Lohia says her father’s decision to provide herself and her brother with the choice to work in the family business or start their own ventures, has equipped her with the knowledge and experience to help improve the lives of others.
“It’s all about value creation at the end of the day. I'm creating my own values with my own focus. And my brother is creating his own values with his own focuses,” she says.
As Lohia notes, legacies are not solely defined by tangible assets, but also the value lessons gleaned from the founders of a family business and their forebears. For many of India’s UHNW diaspora, this is the most important succession role that a family office can play.
“[Succession of] the value system is first and foremost. Wealth transfers will happen, one way or another, but having systems, processes and values in place will help that wealth last for generations,” adds Patni.
