The 2013 PEI 300: Bye-bye boom years

Trying to compare private equity firms is not easy. But with our annual PEI 300 ranking, we look at the world’s top GPs according to a very simple metric: how much capital they have raised for private equity investment in the last five years. The results provide a fascinating insight into where investor capital is flowing – and how those flows are changing.

The most noticeable thing about this year’s results is that the sums raised by the biggest firms are much lower than they were a year ago (see chart, below). Between them, the top 50 firms have raised $586 billion since the start of 2008 – 17 percent less than the equivalent 12 months ago, and by far the lowest total since the onset of the crisis.

The reason is clear: this is the first year that the PEI 300 totals do not include many of the pre-crisis funds that held final closes in 2007 – a year that saw 18 mega-funds rack up more than $182 billion between them. The difference is marked. It also means that some firms that haven’t braved the market since – including the likes of Terra Firma, Thomas H Lee and Fortress Investment Group – drop off the list altogether.

The figures also provide a reliable guide to where capital is being allocated. More than half of these firms are based in North America, but Asia now accounts for the second largest number of representatives. By contrast, the UK has been slipping back: it’s now only the fourth most significant region, behind continental Europe.

The profile of the firms on the list continues to change, too. For example, five of the top 10 are now publicly listed, an idea that would have seemed peculiar when we began to compile this list. And sovereign wealth funds with direct investing programmes continue to exert greater influence: China Investment Corporation has made the top 50 for the first time, having soared 144 places this year, while Abu Dhabi’s International Petroleum Investment Company makes the top 50 for the second time. In the years to come, as the crisis-era vintages become more significant, expect to see some more new names like these creeping up the list.  

THE SMALL PRINT

How the rankings are determined:

The 2013 PEI 300 rankings are based on the amount of private equity direct investment capital a firm has raised between 
1 January 2008 and 1 April 2013.

Definitions:

Private equity:
For the purposes of the PEI 300, the definition of private equity is capital raised for a dedicated programme of investing directly into businesses. This includes equity capital for diversified private equity, buyouts, growth equity, venture capital, turnaround or control-oriented distressed investment capital and mezzanine debt.

Capital raised:
This means capital definitively committed to a private equity direct investment programme. In the case of a fundraising, it means the fund has had a final or official interim close after 1 January 2008. We also count capital raised through other means, such as co-investment vehicles, deal-by-deal co-investment capital, publicly traded vehicles, recycled capital, and earmarked annual contributions from a sponsoring entity.


What does NOT count as private equity?

Funds of funds, secondaries, real estate, infrastructure, debt, PIPE and hedge funds.

NB. The PEI 300 is not a performance ranking, nor does it constitute investment recommendations. For a full methodology, email PEI Research Manager Eduardo Roman (eduardo.r@peimedia.com)