Indian firms dominate family-owned business in Asia: Credit Suisse report

India was ranked third globally and accounted for nearly half of 30 best-performing family-owned businesses companies in Non-Japan Asia, according to the ‘Credit Suisse Family 1,000 in 2018’ report.

The study also revealed that the family-owned businesses outperformed broader equity markets across every region and sector on a long-term basis. 

The Asia region (excluding Japan) accounted for 53 per cent of family-owned companies, followed by Europe at 23 per cent. Interestingly, the US, world’s biggest market in terms of value, accounted for just 12 per cent of family-owned companies.

“Family-owned businesses deliver stronger revenue growth in all regions and higher levels of profitability, which in turn supports the relative strong share price appreciation seen since 2006. In 2017 alone, Non-Japan-Asia-based family-owned companies generated 25.6 per cent greater cash flow return on investment than their non-family owned counterparts, and delivered a 4.2 per cent outperformance in annual average share price return since 2006,” a note by Credit Suisse Research Institute (CSRI) said.

Out of the top 50 most profitable companies globally, 24 were from Asia, with a total market capitalisation of $748 billion. The list included 12 Indian family-owned companies with a total market capitalization of $192.2 billion. 

“Family businesses in Asia outstrip their non-family-owned peers with superior financial performance and more robust share price returns, largely due to their longer-term focus,” CSRI said in a release.

Within Asia, China (159 companies) has the highest number of such businesses followed by India (111). China, India and Hong Kong together account for 65 per cent of the top 1,000 family-owned companies in Non-Japan Asia.

Indian family-owned companies generated a 13.9 per cent annual average share price return since 2006, compared to six per cent recorded by their non-family-owned peers, the report said.

In terms of sector contributions, technology (18 per cent), consumer discretionary (16 per cent) and materials (15 per cent) dominated the list.