Ten private equity firms account for nearly 60% of the $1.5 trillion in total assets under management for the 50 largest firms, according to year-end data collected by Pensions & Investments.
Private equity, for the purposes of P&I's data collection, was broadly defined as investment in companies, either equity or private debt or credit. Seven of the top 10 private equity firms were publicly traded companies and most of the top 10 reported hedge fund and tradable assets as part of the debt/credit portion of their assets under management to keep consistent with regulatory reporting.
Looking at private equity assets alone, the 10 largest firms accounted for 55% of total private equity assets in the most recent survey, down six percentage points from Dec. 31, 2012, the last time P&I collected private equity data. (That listing excluded debt and credit.)
As fundraising has gotten easier, the largest private equity firms are taking in billions of dollars in commitments — but for separate funds dedicated to various strategies, including credit and growth investments as well as regions such as Africa, Mexico, Japan and the Middle East. Even smaller firms are raising larger funds and expanding into new strategies and locales.
But it might be harder for private equity managers to provide the same excess returns that brought investors back to private equity after the financial crisis. Eye-popping valuations for companies are making it difficult for private equity executives to make investments in companies that will produce outsized returns, industry insiders say.
Apollo Global Management LLC, New York, topped the list with $149.5 billion in total private equity assets. Assets of its private equity business — not including debt and credit businesses — were $41 billion, up 8.6% from $37.8 billion as of Dec. 31, 2012. Part of the boost in private equity came from the Dec. 31, 2013, close of Apollo's flagship fund — the $17.5 billion Apollo Investment Fund VIII.
However, Apollo's private equity business was dwarfed by its credit business, which accounted for $108.4 billion in assets, up from $64.4 billion at year-end 2012, according to Apollo's Securities and Exchange Commission filings. As of Dec. 31, Apollo had uncalled commitments of $22.4 billion in its private equity business and $8.7 billion in its credit business, according to its year-end 2014 earnings report. Part of the massive increase in Apollo's credit business came from its 2013 acquisition of the U.S. annuity business of Aviva PLC, which added about $44 billion of assets under management.