Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. ALTERNATIVES
April 01, 2013 01:00 AM

Largest private equity firms rule the roost

Top 10 private equity managers hold more than half of $959 billion assets under management

Arleen Jacobius
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Share
    Dealogic
    Total Buyout Value: $21.56 billionYear: 2007Acquirers: GS Capital Partners LP, AIG Global Asset Management Holdings Corp., Riverstone Holdings, and Carlyle Group Inc. Industry: Energy
    Share
    Dealogic
    Total Buyout Value: $24.86 billionDate: 2008Acquirers: Bain Capital Inc., Thomas H. Lee PartnersIndustry: Media
    Share
    Bloomberg
    Share
    Dealogic
    Total Buyout Value: $27.4 billionDate: 2008Acquirers: Apollo Management LP, TPGIndustry: Gaming
    Share
    Dealogic
    Total Buyout Value: $27.73 billionDate: 2007Acquirer: KKRIndustry: Finance and technology
    Share
    Dealogic
    Total Buyout Value: $27.87 billionDate: 2007Acquirers: TPG, GS Capital Partners LPIndustry: Telecom
    Share
    Dealogic
    Total Buyout Value: $31.1 billionDate: 1988Acquirer: KKRIndustry: Food and Tobacco
    Share
    Dealogic
    Total Buyout Value: $32.67 billionDate: 2006Acquirers: Bain Capital Inc., KKR, Merrill Lynch Global Private Equity Industry: Healthcare
    Share
    Dealogic
    Total Buyout Value: $38.89 billionDate: 2007Acquirer: Blackstone Real Estate Partners LPIndustry: Real Estate
    Share
    Dealogic
    Total Buyout Value: $43.8 billionDate: 2007Acquirer: KKR, Goldman Sachs Capital Partners, TPGIndustry: Utilities and Energy

    Updated with correction

    Mega firms control the majority of the $959 billion in private equity assets under management worldwide, excluding venture capital, by the 50 largest managers.

    The largest — Oaktree Capital Management LP, KKR & Co. LP and Bain Capital LLC — control almost a quarter of that total, and the top 10 account for more than half.

    Most of the managers in the top 10 are household names, and half of them are public. They are Oaktree, KKR, Carlyle Group LLC, Blackstone Group LP and Apollo Global Management LLC.

    Four of the private equity firms in the top 10 had double-digit growth last year. Advent International Corp.'s total private equity assets were up a whopping 67% to $32.7 billion, Bain's assets grew nearly 12% to $66.5 billion, Blackstone Group's assets were up 11% to $51 billion and TPG Capital was up 10% to $54.5 billion.

    Information for Pensions & Investments' ranking came directly from the firms, their filings with the Securities and Exchange Commission and their websites.

    Firms up and down P&I's size spectrum were able to cash in last year.

    'Rush to exit'

    “In the fourth quarter 2012, there was a rush to exit,” but this was typically smaller private equity-backed companies, said Andrew R. Cristinzio, Maclean Va.-based partner in PricewaterhouseCoopers LLP's deal practice.

    Some 58% of the total number of private-equity-backed transactions in 2012 was valued at $100 million or less, according to Preqin, a London-based alternative investment research firm.

    Sixth-ranked Blackstone Group reported returning $3.5 billion to investors last year with exits occurring through public markets, strategic sales and recapitalizations, according to Blackstone's fourth-quarter earnings report. Ranked seventh, Apollo Global Management earned $561.6 million of realized gains from carried interest income, which the firm in its year-end earnings report largely attributed to the disposition of investments held in LyondellBasell Industries and Charter Communications Inc.

    Meanwhile, 45th-ranked growth equity private equity firm JMI Equity earned $1 billion in realizations over the past 12 months from a combination of initial public offerings, mergers and acquisitions, and recapitalizations, noted Paul Barber, managing partner who is based in the firm's San Diego office.

    Last year, 27th-ranked Madison Dearborn Partners LLC earned a total of $1.23 billion, mainly from the sale of portfolio companies TransUnion LLC, NextG Communications Inc. and BWAY Corp., as well as the final payment from the sale of Wind Telecom (Weather), according to a year-end investor letter obtained by P&I.

    Private-equity-backed transactions accelerated into the fourth quarter because sellers believed they would face tax increases in 2013, said Juan Alva, partner and head of strategy and corporate development in the Los Angeles office of Fifth Street Finance Corp., a specialty finance company.

    Fifth Street Finance, which caters to the smaller end of the mergers and acquisition market, logged a record for the company of $422 million in transactions in the fourth quarter, up 54.6% from $273 million in the fourth quarter of 2010.

    'Significant liquidity'

    “The lending environment certainly helped. There is significant liquidity,” Mr. Alva said.

    Banks and alternative lenders are aggressively trying to lend in the leveraged buyout arena, Mr. Alva said.

    Baird Capital, which ranked 42nd, was an active buyer last year, said Randy Mehl, partner of the U.S. private equity group in the Milwaukee office.

    Baird's private equity group bought three portfolio companies and seven add-on acquisitions. But the firm also had an eye on selling portfolio companies.

    “This is an environment where I would say the valuations are relatively high for (large companies). It's a good time to get realizations,” Mr. Mehl said.

    In this environment, the firm is returning to a time-honored buyout strategy of “buy and build” — purchasing companies, building them up and then selling them.

    “You have to be disciplined and creative in deploying capital,” Mr. Mehl added.

    Indeed, Madison Dearborn warned investors in the year-end letter that leverage amounts on private equity transactions are reaching 2007 levels.

    “Experience has shown time and again that the economic benefit of high leverage and cheap debt is rarely retained by the buyer, and is almost always paid over to the seller in the form of higher purchase prices, a pattern which was repeated in 2012 as average acquisition multiples moved above 9x,” the letter stated.

    “Acting on these convictions, we have continued to emphasize selling portfolio companies,” the letter said.

    Alan Jones, managing director and head of global private equity at Morgan Stanley Investment Management, New York, concurred.

    'Interesting trends'

    “I think the two most interesting trends in private equity last year were the continued frothiness of the leveraged finance market and the impact that had on private equity,” Mr. Jones said. “If you were selling or trying to monetize assets, it was great news. Buyers could pay higher for assets.”

    Business for private equity firms varied around the globe.

    “I think 2012 was rather contrasted mostly because things went pretty well in the States, pretty well in emerging markets and pretty poorly in Europe, for obvious reasons,” said Antoine Drean, founder and CEO of Paris-based private equity advisory firm and placement agent Triago.

    “It's a funny time where the prospects of growth of many companies are questionable or non-existent within five years,” said Michael G. Fisch, president and CEO of the New York-based private equity manager American Securities, which ranked 33rd.

    Firms can pay more for companies because they can finance their purchases at a lower interest rate. Rising stock markets are increasing the value of listed companies used as benchmarks to arrive at private company valuations, Mr. Fisch explained.

    “Valuations are disconnected with the flat earnings reality,” Mr. Fisch said.

    In another key element of private equity, fundraising was a story of the haves and the have-nots.

    Darren Spencer, director, alternative investment consulting, in the New York office of Russell Investments, called the fundraising market “bifurcated.”

    Some firms are surpassing their fundraising targets and hitting the funds' maximum size or “hard cap,” while the rest are struggling to raise money, PwC's Mr. Cristinzio said.

    Size doesn't matter

    But within the haves or have-nots, firm size didn't seem to matter.

    During the year, second-ranked KKR closed on $4 billion for its second pan-Asian fund that is expected to reach a target close with $6 billion in committed capital, according to the firm's fourth-quarter earnings report. KKR also raised $6.2 billion in committed capital for its 11th buyout fund, KKR North American XI Fund, which has an $8 billion to $10 billion target, according to information on the website of the $61.1 billion Oregon Investment Council, Tigard, which is an investor in the fund.

    American Securities closed its sixth fund with $3.6 billion in committed capital, Mr. Fisch said.

    Meanwhile, Blackstone Group in September closed its first private equity energy fund, the $2.5 billion for Blackstone Energy Partners.

    And Neuberger Berman, which ranked 24th, closed a $1.1 billion co-investment fund that was oversubscribed and a $1.1 billion Dyal Capital Partners fund that invests in hedge fund firms. (Dyal Capital Partners is a private equity fund managed by Neuberger Berman Group.)

    The days of the $20 billion fund appear to be over for now, said John LeClaire, partner and chair of the private equity group in the Boston office of law firm Goodwin Procter LLP. Most of the large funds raised last year were between $1 billion and $5 billion.

    And it's not just fund sizes that are declining. Tony Tutrone, managing director and global head of alternatives at Neuberger Berman in New York, predicts the number of private equity managers will shrink.

    “It's clear to me there is a shakeout occurring in the private equity business where private equity firms that have produced good returns and have appropriate-sized teams and talent have continued to raise money,” Mr. Tutrone said.

    “Firms with mediocre returns, turnover of teams” and less than stellar returns will not survive, Mr. Tutrone said.

    Among the fallen will be smaller funds-of-funds firms with fewer resources and weaker track records than some of the larger firms, Mr. Tutrone said.

    Related Articles
    More institutions using managers as strategic partners
    Institutional investors still in love with secondary PE market
    Cheap debt means private equity finally pays off
    Harvard's Lerner pushing transparency in private equity
    Largest private equity managers
    For VC and buyout funds, smaller means more
    The state of private equity
    For VC and buyout funds, smaller means more
    Carlyle Group AUM rises 3.6% for quarter, nearly 11% from year ago
    Baird Advisors bringing aboard fixed-income trio from Dearborn Partners
    Rivalry developing in Chicago private equity
    J.P. Morgan said to be in talks to sell $4 billion private equity stakes
    Preqin: Alternative investments worldwide hit record $6 trillion
    Deals might be hard to find for newly flush buyout funds
    Fifth Street chooses business development managing director
    Largest leveraged buyouts
    Compensation of leading PE managers
    The 10 largest PE firms
    Recommended for You
    Eimear Palmer
    Pantheon adds global head of ESG
    Franklin Templeton names head of sustainable agri-food
    ONLINE_180819917_AR_0_ZXNMFGHRAFDD.jpg
    Mitsui, Nomura to acquire Aussie real assets manager New Forests
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference