You've read about the deals, and now Private Equity Intelligence Ltd. is removing the mystique surrounding the profits made by private equity firms and their investors.
The private equity research firm has completed the first-ever review of those profits, known as carry. They did it by sending Freedom of Information Act requests to public pension plans as well as getting some data directly from private equity funds, and creating a database from the data they received.
Between 1991 and 2003, investors committed $1 trillion to private equity, said Mark O'Hare, managing director of Private Equity Intelligence, London. During that period, investors made $300 billion from those commitments, and their general partners earned $54 billion in carry.
A small group of successful funds had most of the carry: 442 funds earned just less than $40 billion of the $54 billion earned collectively by the 2,400 funds in Private Equity Intelligence's database, which includes U.S. and European venture capital and buyout funds. And half the carry earned was in the hands of 100 fund managers that each earned more than $100 million in profits. Of these, 15 funds earned more than $400 million each in carry, and four (all U.S. venture funds) earned more than $1 billion each in profits. Among the most successful funds were Blackstone Capital Partners II, CBC European Equity Partners II, Hellman & Friedman II, KKR Fund 1996, Kleiner Perkins Caufield Byers VII and Sequoia Capital VII.