

The received wisdom is that consolidation is inevitable in maturing industries. It is little surprise, then, that such forces are increasingly reshaping the private markets.
PEI 300 debutant Blue Owl Capital (42) is perhaps the best example in this year’s ranking. The firm was brought into existence last year via a merger between credit firm Owl Rock Capital – whose funds do not qualify for this private equity ranking – and Dyal Capital Partners, the former GP stakes unit of Neuberger Berman.
This merger changed the face of the PEI 300 in multiple ways. Not only has the formation of Blue Owl introduced a prominent new entrant in the upper echelons of the ranking, but the loss of Dyal funds has also shunted private markets giant Neuberger Berman down the table from 10th last year to 39th in 2022.
Consolidation has also helped to shape this year’s top 10. EQT (3) gained an additional €1.94 billion of qualifying funds from its recent acquisition of European life sciences firm LSP; given that there is only €1.87 billion separating EQT from CVC Capital Partners (4), the merger proved the difference.
EQT could receive a further – and far more substantial – boost in next year’s rankings from its impending merger with Baring Private Equity Asia (35), which is expected to complete in Q4 2022. The newly combined entity will launch EQT’s other private capital programmes, such as public value, venture capital, life sciences and future, in Asia – bringing with it the potential for a huge amount of additional capital in later rankings.
Changing approach
Private equity firms have become more aggressive in their consolidation plans. Secondaries strategies – which do not qualify for the PEI 300 – have been of particular appeal, with two of the more recent examples being CVC’s acquisition of Glendower and Ares Management’s purchase of Landmark Partners. EQT, meanwhile, also pushed deeper into real estate with its acquisition of Exeter last year.
Bolt-ons such as these, though expensive, are often an efficient way of rapidly expanding assets under management, fee-related earnings and investor networks.
“To create an organisation that can deliver industry-leading returns consistently and at scale is not an easy thing to do – it would require sophistication, scale, investments and insights that are unprecedented,” BPEA managing director Kosmo Kalliarekos, a 14-year veteran of the firm and chair of its portfolio management committee, told Private Equity International in April.
“We needed to think about what we can do to stay relevant over the next 10, 20 years, so in some respects what we did here is necessary, not a luxury,” Kalliarekos said.
As private equity becomes more crowded and investors clamour for greater exposure, expect more of the largest firms to explore inorganic growth as a means of staying, or getting, ahead of the competition.