After standing up surprisingly well to covid-19, the private equity market went on to enjoy a historic 2021, judging by our third annual Global Investor 100 ranking. The pension funds, insurers, sovereign wealth funds and other investors that make up the list hold $1.79 trillion in private equity assets, up a scarcely believable 49 percent from our 2021 ranking.
The private equity exposures of many of the 10 largest investors grew appreciably. The top 10 have an average of $63.6 billion invested in PE, versus $41.5 billion in last year’s ranking. An average of 15.3 percent of these investors’ portfolios is allocated to PE, against 13 percent last year, driven by a combination of new commitments and outperformance.
There’s a familiar name at the top of the table in the form of Canada’s largest public pension, CPP Investments, the first-place finisher in each of the GI 100s so far. Second and third have switched places, with Caisse de dépôt et placement du Québec coming just behind GIC. Altogether, the top three account for $292 billion of private equity AUM, up from $184.5 billion in last year’s ranking.
North American institutions again made up the largest number of investors on the list, with their weighting more or less in line with last year. Seventy-one LPs in the ranking call the region home, accounting for 64 percent of the total capital allocated to PE by the GI 100. Last year, North American investors numbered 70 and accounted for 67 percent of the total.
The number of European institutions, meanwhile, has declined for the third time in as many years. Fifteen European institutions featured on this year’s list, compared with 18 last year and 24 the year before. They represented less than 14 percent of the total capital allocated to PE, roughly on par with last year and down from 18 percent a year earlier.
The number of Asia-Pacific investors on the list rose to 13 from 11 last year, helped by new entrants such as Australia’s QIC and Government Pension Investment Fund, Japan. The proportion of capital accounted for by Asian institutions also increased, from 16 percent last year to 19.7 percent this time around. The only institution from the Middle East and Africa to feature is Abu Dhabi Investment Authority, which sits in the top 10 and accounts for 2.7 percent of the total.
First-timers on the list number 12, down from 16 in last year’s ranking. Several of these are in the upper reaches of the table, including French sovereign wealth fund Bpifrance (13) and Kaiser Permanente (15).
There are 53 public pensions on the list, making them by some distance the most well-represented type of investor. Meanwhile, only two banking institutions made the list: Japan Post Bank, which ranked 22nd, and the wealth management arm of Crédit Agricole, CA Indosuez Wealth Management, which ranked 72nd. There are no family offices or multi-family offices on the list.
The bar to featuring on the GI 100 was considerably higher this year: institutions needed a portfolio of at least $5.1 billion to make it on, compared with $3.5 billion last year and $2.4 billion the year before. Among the sizeable investors that just missed out were Los Angeles Fire and Police Pensions, New York City Police Pension Fund and the Ford Foundation.
The macroeconomic environment has changed considerably in 2022, with inflation and rising rates posing challenges for portfolio companies and wiping value off many public stocks. The full impact on private equity will remain unclear for some time. Still, institutional investors can look back at 2021 as a high point for the asset class.