Private equity assets surged to $20.3 billion in 1998, up a whopping 33% from the $15.3 billion managed in 1997.
The private equity assets are those reported under internal management at the 763 investment firms profiled in Pensions & Investments' annual money manager survey. The major players on the P&I ranking changed to an extent, largely because of mergers or new ways of reporting, as well as increased business.
UBS Brinson jumped to the top of this year's list, with $7.9 billion in private equity under management. A spokesman at the Chicago-based money manager, said: "We broke out the numbers differently last year. But the merger (between Brinson Partners' parent company Swiss Bank Corp. and Union Bank of Switzerland) in June 1998 also helped." Even before the merger, he said, Brinson was running a healthy private equity business. "Oil and gas, timber and private real estate equity are also included in that $7.9 billion figure," according to the spokesman.
Some firms don't show up on the list this year because they were unable or unwilling to provide breakouts. These include J.P. Morgan Investment Management, New York, which was No. 1 on the list last year with $4.5 billion in private equity. Briget Smith, a spokeswoman at the firm, said that as of Dec. 31, the firm was managing about $4.4 billion in the asset class.
Abbott Capital Management, Boston, which specializes in funds of funds, saw its private equity business climb 40% to $3 billion in 1998 from $1.8 billion the previous year.
Garz Soule, director of marketing, attributed the increase to new business, including some new separate accounts and the closing of a fund of funds, which raised $250 million.
"The eye-popping returns make investors eager to get into these funds," he said.
The story was similar at First Reserve Corp., Greenwich, Conn., where business more than doubled to $1.6 billion in 1998 from $775 million the previous year.
Cathleen Ellsworth, managing director, said most of the increase came from $812 million raised for a new fund plus a new separate account.
INVESCO, Atlanta, is new to the list, with $1 billion in private equity assets, including funds of funds and direct investments. These all came from LGT Asset Management, which was acquired by INVESCO's parent company, AMVESCAP, in May 1998.
Forstmann-Leff International, New York, also did an impressive private equity business in 1998. Assets jumped 67% to $608 million from $365 million in 1997.
Walter Dec, managing partner, said there were two explanations for the big increase: "We're being very aggressive and doing well, but we might have under-reported the number last year, or neglected to count one of the portfolios."
