A report from Preqin shows the number of investors that allocate at least $1 billion to private equity has grown to 359 in 2018, up 14% from 315 in 2017.
Public pension funds still comprise the largest section of what Preqin calls the "billion dollar club," accounting for 30% of its members and 37% of aggregate allocations. And even though sovereign wealth funds represent 4% of total private equity investors with only 14 members, they represent the second-largest portion of total investments at $215 billion, 14% of aggregate allocations.
Outside of public pension funds and sovereign wealth funds, corporate pension plans make up 16% of the group, 12% insurance companies, 10% asset managers, 10% other, 6% endowments, 5% banks, 4% foundations and 3% family offices.
In total, $1 billion-plus investors have $1.54 trillion allocated to the asset class, 52% of the $2.97 trillion in assets held by the industry. This is up substantially from $1.24 trillion that these investors allocated to private equity in 2017, as almost all investor types in the club saw double-digit percentage point increases to their allocations.
Other findings from Preqin's report show that $1 billion-plus investors allocate an average of 10.6% of their total assets to private equity, compared to 8% among other investors. They also typically make larger investments to more funds, with 66% percent of club members intending to commit at least $100 million to private equity over the next 12 months, compared to 17% of other investors.
Similarly, 59% of billion dollar club investors intend to make seven or more different commitments over the next 12 months, compared to 21% of other private equity investors.
"The club includes some of the largest institutional investors not just in private equity, but globally," said Christopher Elvin, Preqin's head of private equity products, in a news release accompanying the report. "This gives them tremendous influence in shaping standards, influencing fee negotiations and gaining access to oversubscribed vehicles and alternative methods of accessing the asset class."
However, Mr. Elvin added that the club "creates challenges for other investors and fund managers alike." In particular, he noted that "club members may make it more difficult for other investors to access vehicles that are already in high demand, and the size of their commitments mean that even though they are more likely to consider first-time funds than other investors, they may be difficult to accommodate for many fund managers."
