For private equity firms or PE firms, the year 2019 was another exemplary year. Even the decade which ended on 31 December 2019 was robust for private investment companies despite the global financial crisis, political uncertainty in various countries across the world, and immense competition.
Great fundraising, strong deal-making, and highly positive investor sentiments were the factors that drove the private equity industry in the recent past.
Most of the top private equity firms completed their target for 2019, in the first nine months itself. It included the top PE names like Blackstone Group Inc ($26 billion buyout funds in 9M2019) and Vista Equity Partners ($16 billion funds in 9M2019).
During the first nine months of 2019, the U.S. private equity firms raised $191 billion, which was almost at an equal level in comparison to the same period of 2018.
Top Private Equity Firms
- The Blackstone Group
- Apollo Global Management
- The Carlyle Group
- Kohlberg Kravis Robert (KKR)
- Vista Equity Partners
- CVC Capital Partners
- Bain Capital
- General Atlantic
- Ares Management
- Warburg Pincus
- Advent International
- Clayton, Dubilier & Rice (CD&R)
- Oaktree Capital Management
Incorporated in 1985, The Blackstone Group (NYSE: BX) is the largest private equity firm in the world.
Blackstone offers a plethora of investment products and services. A few major businesses of the Company are private equity, real estate, credit (GSO), hedge fund solutions, and insurance solutions.
The private equity business of Blackstone holds a portfolio of 98 companies, and its PE business claims assets under management (AUM) of $89 billion.
Currently, the PE business segment of Blackstone is sitting with a dry powder of $72 billion. The Company tries to invest in businesses where its capital, strategic insight, and outstanding operation support can create exponential financial returns.
Apollo Global Management (NYSE: APO) is the world's largest alternative investment manager.
Established in 1990, the business of Apollo comprises of private equity, credit, real assets, and public vehicles. The assets under management (AUM) of Apollo has grown six times (6x) in the last 10 years. A large chunk of Apollo's revenue comes from the public pensions and sovereign funds.
As of 30 September 2019, the AUM of Apollo stood at $323 billion and dry powder at $44.3 billion. The private equity business holds a portfolio of more than 150 companies across sectors and an AUM of $78 billion.
A flexible investment model that includes opportunistic buyout and build-ups, corporate carve-outs, and distressed investments is the growth driver of its PE business.
Founded in 1987 and based in Washington DC, the Carlyle Group (NASDAQ: CG) is one of the most prestigious equity firms in the world.
The Company manages its operations through 33 offices spread at the different parts of the globe. Carlyle has four business segments, and they are corporate private equity, real assets, global credit, as well as investment solutions.
The investor network of Carlyle is spread in 94 countries, with 2,600 investors. The clientele of the Company ranges from pension funds to high net worth investors and sovereign funds.
With $223 billion in assets under management, Carlyle aims to generate superior returns to its investors through the highest ethical & business standards, in-depth industry knowledge, and consistent decision making.
The private equity business of Carlyle manages assets aggregating to $84 billion. The corporate private equity portfolio of Carlyle includes 36 active funds, 182 portfolio companies, and 275 investment professionals working at 22 offices on 6 continents. Since 1990, the private equity business segment of Carlyle has made 643 transactions and invested $103 billion.
Kohlberg Kravis Robert, widely known as KKR (NYSE: KKR), is a leading name in the global investment arena. KKR manages asset classes like private equity, energy, real estate, infrastructure, credit, and the list goes on.
KKR manages assets worth $208.4 billion. Today it has more than 1000 investors, which was at 275 in 2008. The private equity business of KKR invests in companies across sectors. As of 30 September 2019, KKR's private equity business manages assets worth $74 billion.
TPG is a global alternative asset firm with an AUM of more than $119 billion. TPG is specialized in private equity, real estate, hedge fund, and credit.
TPG Capital, a private equity arm of TPG that serves US customers, helps its partners to build the business by unlocking the value. Since its inception in 1993, it has invested more than $50 billion of equity capital through 175 transactions.
TPG Capital Asia that operates in countries like China, India, Southeast Asia, Japan, Korea, and Australia, is one of the first PE firms to invest in Asia. It currently manages assets worth about $10billion.
Founded in 2007, TPG Growth currently manages assets worth $14.5 billion. TPG Growth mainly focuses on sectors like media, technology, and industrial. Specialized in growth equity and middle-market buyouts, TPG Growth assists companies at all stages, from inception to international expansion, to achieve their full potential. The geographic concentration of TPG growth is the US, Europe, Africa, and Asia.
TPG Alternative & Renewable Technologies (TPG ART) has an AUM of $284 million. TPG ART is a growth-equity platform that helps the companies across all the sectors to embrace technologies that reduce environmental impact and promote resource efficiency.
Founded in 2000, Vista Equity Partners is a US-based investment company. Vista offers strategies in private equity, credit, as well as in public equity.
The total funding amount of the firm stands at $52 billion. Vista invests in software, data, and technology companies with a long-term perspective. It mainly targets SaaS business with annual revenue ranging from $10million to $30million.
CVC is a big name in private equity and credit. Based at Luxembourg, CVC manages its operation through 24 offices (12 in Europe, 3 in the Americas, and 9 in the Asia Pacific region). CVC has $134.5 billion in assets under management.
The Company has a well-diversified customer base and diverse products. The driving factor of CVC is the in-depth knowledge of the local market that it operates.
The private equity business of CVC has $55.4billion fund commitments, and it invests in companies with highly competitive leadership. Currently, CVC has a portfolio of 81 companies.
In Europe and the Americas, its PE business focuses on fundamentally sound, well-managed, and cash generative business with an enterprise value ranging between €500 million and €5 billion+.
In Asia, the CVC targets superior-quality players of the consumer and service sector with an enterprise value ranging between €250 million and €1.5 billion.
One of the leading names in the multi-asset alternative investment space is Bain Capital. Established in 1984, as a private partnership firm focused on management consulting to private equity investing, Bain Capital has grown as a large private equity firm.
Today, it offers an array of products and services to its customers like private equity, public equity, credit, real estate, ventures, life sciences, etc. At present, Bain Capital has a fund commitment of about $105 billion. The Company has 19 offices worldwide and has more than a thousand employees.
The private equity business unit of Bain Capital holds a diverse portfolio of companies that include businesses of all stages, sectors, and geographies. Since its inception, the private equity business of Bain Capital has made more than 940 deals through its 11 offices spread in 4 continents.
The Company currently manages more than $65 billion in private equity assets. A holistic approach, deep partnership with management, and a globally integrated team are a few factors that drive the growth of Bain Capital Private Equity.
General Atlantic is an expert in transforming the disruptive business into a promising and profitable one. The firm mainly focuses on four sectors, and these are consumer, financial services, healthcare, and technology.
Over four decades, it has invested in more than 360 companies. General Atlantic operates under a single investment platform across 14 locations and has an AUM of $35 billion. The firm has a globally integrated team of 340 professionals. Its current portfolio comprises of 120 companies across four sectors.
General Atlantic makes more than half of its investments outside the United States and more than one-third in the emerging markets. The firm sees a lot of growth potential in Asia and believes that it'll be the primary driver of global growth in the future.
Ares Management (NYSE: ARES) is a Los Angeles based alternative asset management firm that manages assets worth $144 billion. The firm operates in three business segments, like credit, private equity, and real estate.
Founded in 1997, Ares has offices in the United States, Europe, Asia, and Australia. At Ares, 465 investment professionals work to deliver risk-adjusted returns throughout market cycles.
A large chunk of Ares's revenue comes from the United States, and the U.S. contributes 56% to the AUM of Ares. Contribution of Europe to the AUM stood at 22%, and Asia & Australia together contribute 14%.
Ares has private equity assets of $25.5 billion. The private equity business of Ares is mainly concentrated in North America, Europe, and China.
In North America and Europe, Ares makes either majority control investments or shared-control investments in companies with strong management teams. While in China, it mainly targets minority growth equity investment in excellent quality companies across sectors.
Incorporated in 1939, the operation of Warburg is entirely concentrated in private equity. Over the five decades, the firm has invested $81 billion in 890 companies located in 40 different countries.
Warburg helps companies with an excellent management team to formulate strategies, implement suitable financial structures, and recruit appropriate talents. Warburg invests in companies of all stages with a long-term perspective.
Warburg's active portfolio comprises of 190 companies from different sectors, and it has more than $58 billion in assets under management. Warburg established its first institutional fund in 1971, and since then, it has raised 19 private equity funds aggregating to a sum of $95 billion.
Warburg has in-depth expertise in healthcare, energy, financial services, industrial & business services, and technology, media, and telecommunications.
Advent International is another leading player in the private equity industry. Established in 1984, Advent focuses on buyouts and growth equity investments in five sectors.
The activities of Advent revolves around five core sectors, and they are technology, business & financial services, healthcare, industrial, as well as retail, consumer & leisure. Advent has 15 offices in 12 countries and is focused on the markets of Asia, Europe, Latin America, and North America.
Advent initiated the private equity strategies in 1989, and since then, it has made more than 350 private equity investments (across 41 countries) aggregating to a sum of $47 billion. The firm mainly focuses on companies with an enterprise value ranging between $50 million - $5 billion.
Advent has three investment programs:
- Global Private Equity (GPE) that invests in North America, Europe, and in a few selected markets. Under this program, Advent deals buyouts, growth equity investments, public-to-private transactions, and recapitalization.
- Advent Global Technology; a technology-focused companion fund to the GPE program.
- Latin American Private Equity Fund. Under this program, Advent invests $50 million to $300 million in those Latin American companies whose enterprise value ranges between $50 million - $1 billion.
Clayton, Dubilier & Rice is one of the oldest PE firms in the world and operates across North America and Europe. Apart from this, it has strategic partnerships with Kedaara Capital Advisors LLP in India, and Principle Capital in China.
CD&R focuses on globally diversified businesses of the leading sectors like healthcare, industrial, service sectors, and consumer/retail.
CD&R helps the companies to launch new products & services, foray into new geographies, proceed with Mergers and Acquisitions (M&A), and accomplish all those strategies that can augment the performance of their businesses.
Since its inception, CD&R has created a total enterprise value of $62 billion at realized portfolio companies. Its portfolio comprises of 27 companies.
With assets under management valued at $122 billion, Oaktree Capital Management (NYSE: OAK) focuses on credit, real estate, private equity, and listed equity. The firm is an expert in credit strategies.
The clientele of Oaktree consists of pension funds, sovereign wealth funds, corporates, etc.
In 2019, Brookfield Asset Management acquired a majority stake in Oaktree. Today, together, they offer the most comprehensive alternative investment products. Currently, Oaktree operates as an independent business within the Brookfield family.
At present, Oaktree has about $13 billion in private assets. The private equity business of Oaktree invests in undervalued companies and helps them to improve value through rightsizing capital structures, streamlining operations, enhancing core businesses, and creating new growth platforms.
In-depth sector knowledge and an extensive network help Oaktree to put stress on risk control and downside protection.
Ardian started its journey in 1996 in Paris and made its first investment in 1998. In 1999, by opening offices in London and New York, it expanded its business and became an international name.
Today, Ardian is one of the world's leading private investment houses with an AUM of $96 billion. Currently, the business of the firm is spread in Europe, Asia, and the Americas.
Over the years, Ardian has helped more than 250 companies to create wealth, and its current portfolio comprises of more than 150 companies.
After a smooth 2019, the year 2020 is going to be a challenging year for the players in the private equity space. As of 01 January 2020, there are 3,524 funds in the market, seeking a total of $926 billion.
Compared to the fundraising level of 2019, this is almost two years' supply, indicating that a few funds may find it challenging to complete their fundraising process. Ipso facto, 2020 is not going to be a cakewalk for the private equity players. Even the trade wars and high valuations are expected to impact the Merger and Acquisition (M&A) activities.
The entry of new players and the emergence of the new asset classes in private equity are a few factors to watch out in the current year.
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