Private equity represents second-largest alternatives pool

Private equity represents the second-largest segment within the alternative asset class behind real estate, according to a survey of the world’s top 100 alternatives managers - who together manage $3,136 billion.

Private equity accounted for $696 billion of the $3,136 billion managed by the top 100 global alternative asset managers featured in Towers Watson’s latest Global Alternatives Survey. The average AUM for the 21 private equity firms featured was $33.2 billion.

The Carlyle Group was the highest placed private equity group, coming second in the overall ranking with $90.7 billion AUM. Goldman Sachs & Co ($78 billion) was the next highest, in fifth. The Blackstone Group’s private equity arm ($53.2 billion, 12th), TPG Capital ($49.4 billion, 13th) and Oaktree Capital Management ($41.8 billion, 20th) also made the top 20.

Dutch group AlpInvest Partners, which is 60 percent owned by the Carlyle Group, was the largest fund of private equity funds. All told, the 11 funds of private equity funds featured in the ranking accounted for $288 billion, with an average AUM figure of $23 billion.

Real estate funds accounted for the greatest proportion within the Top 100, with $1,101 billion in AUM across 30 funds, or 35 percent of the total AUM. A real estate group, CBRE Global Investors, also topped the overall list with total AUM of $94.1 billion.

Two infrastructure funds made it into the top 100 list, accounting for four percent of the top 100’s AUM with $119.1 billion. 

Data was collected directly from managers in the majority of cases, with publically-available sources used for the remainder, Towers Watson said. 

Geographic exposure

The survey found 61 percent of capital held by the Top 100’s private equity firms was invested in North and Central America, with 26 percent in Europe and nine percent in Asia Pacific.

For the two infrastructure funds in the list, Europe was the most popular investment destination, accounting for 45 percent of the total. 34 percent went to Central and North America, and 14 percent to Asia Pacific.

Real estate funds in the list had 39 percent of their assets in Europe, 46 percent in Central and North America, and 11 percent in Asia Pacific.

Sources of capital

Pension funds were the largest contributor of capital to the managers in the Top 100, accounting for 33 percent or $1,047 billion. Insurance groups represented seven percent of the total, with $216 billion, followed by sovereign wealth funds (three percent with $95 billion) and endowments and foundations (two percent with $54 billion). Other LP types accounted for the remaining 55 percent.

Infrastructure-focused Macquarie Group had the largest amount of pension fund capital – $59 billion – allocated to it, ahead of CBRE Global Investors with $54 billion. The largest private equity beneficiary of pension fund commitments was The Blackstone Group, with $53 billion.

Private equity funds of funds accounted for 18 percent of the capital invested with the Top 100 managers, behind real estate (40 percent) but ahead of private equity (14 percent) and infrastructure (9 percent).

Insurance groups showed a heavier weighting towards real estate (60 percent), with private equity funds of funds lagging with 12 percent, just ahead of direct private equity (11 percent).

Sovereign wealth funds had relatively little exposure to private equity funds of funds (four percent), but proportionally large exposure to private equity (25 percent). Real estate commitments accounted for 32 percent of SWF’s overall allocation to Top 100 managers.

Finally, endowments and foundations showed a more even allocation: private equity funds of funds (12 percent); real estate (16 percent); and private equity (33 percent).