Top PE managers see assets top $1trn

Private equity accounted for a higher proportion of assets managed by alternatives specialists last year, according to a new survey, with Goldman Sachs, Blackstone and TPG leading the way.

Total assets managed by the world’s top 100 alternative investment firms hit the $3 trillion mark in 2012, according to a new study by advisory firm Towers Watson

Direct private equity accounted for 23 percent of this total – up from 22 percent last year – which equates to $717 billion of assets under management. Another $315 billion was allocated to private equity fund of funds – less than direct hedge funds, but more than funds of hedge funds, infrastructure and commodities. All told, that means these 100 managers allocated $1.03 trillion to private equity – only marginally less than real estate, the largest category, which accounted for $1.04 trillion.

The survey also showed that total alternative assets under management globally are now at around $5.1 trillion, shared in similar proportion between asset classes as for those managed by top 100 firms. 

Pension funds continued to be the most important investors in direct private equity, with 14 percent of their allocation to alternatives going to the asset class. Their broader investments in alternatives were found to represent 19 percent of total pension fund assets globally, up from 5 percent ten years ago, and accounted for 36 percent of the top 100 managers’ overall AuM. 

Insurers, with 9 percent, came a distant second – but their private equity allocation to the largest 25 asset managers has fallen to 4 percent, down from 8 percent in 2011. The pattern was similar for sovereign wealth funds, which decreased their exposure to top buyout funds last year from 39 percent to 30 percent. 

Endowments and foundations were the only category to increase their allocation to the asset class, up to 19 percent last year from 9 percent in 2011. 

Goldman Sachs, with $68 billion worth of assets, topped the managers' ranking for private equity, beating Blackstone with $57 billion and TPG with $55 billion. The largest fund of funds manager was Alpinvest Partners, with $44 billion, while the overall winner was Macquarie Group, with $95 billion invested in infrastructure. 

North America continued to represent the largest destination for direct private equity investments, accounting for 57 percent of the capital deployed by the top 100 managers, followed by Europe at 31 percent and Asia Pacific at 10 percent. This pattern was even more pronounced for private equity fund of funds, with nearly 60 percent of their assets held in North America.