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Insights from the PEI 300

Our proprietary ranking of the world’s largest private equity firms reveals an intriguing picture of the industry as a whole.

 This week we published this year’s iteration of the PEI 300, our proprietary ranking of the world’s largest private equity firms by capital raised within the last five years.

It was well worth the wait. Not only does the 2016 ranking highlight the rises and falls of individual firms – and a new champion with the largest ever fundraising total recorded by the PEI 300 – closer inspection reveals some intriguing features about the private equity industry as a whole.

Here are some insight’s gleaned from the 2016 ranking.

1. THE INDUSTRY IS ON THE UP

Having decreased steadily in the wake of the collapse of Lehman Brothers (as the fundraising boom years of 2007 and 2008 dropped out of the five-year window), for the second year in a row the overall fundraising total of the PEI 300 has increased, this time by a healthy 14 percent. At $1.23 trillion, we have not yet reached the giddy heights of 2009-13, where the 300’s collective fundraising efforts never dipped below $1.3 trillion each year, but we are moving in the right direction.

The picture’s even rosier among the top 50, where the aggregate fundraising total has jumped almost 16 percent to $646 billion – for the second year running, more than the total amount raised by firms placed 51-300 combined.

2. NO ONE'S PLACE IS SAFE

In 2013 it looked as though nothing could unseat TPG from the top spot. And then along came Carlyle Group, who seized the 2014 crown with a five-year fundraising total of $32.8 billion thanks to a storming year. And then this year’s champion, The Blackstone Group, blew its closest rivals out of the water with a five-year total of almost $60 billion. TPG, meanwhile, has slipped from second place to ninth, while Warburg Pincus, which has bounced in and out of the top 10 since the PEI 300 began, has leaped to third for the first time. And what of former top 10 mainstay Goldman Sachs? It has continued its descent to land at 27th in the rankings.

3. THERE'S A NEW KING IN ASIA

In February 2015 Jean Eric Salata’s Baring Private Equity Asia closed its sixth pan-Asian vehicle on its $3.9 billion hard-cap, the largest amount ever raised for the region by an Asia-based private equity fund. The close catapulted the firm from 119th to 44th in last year’s PEI 300, inches behind local rivals RRJ Capital.

Baring’s fund didn’t hold the record for long. In September, RRJ Capital, run by brothers Richard and Charles Ong, closed its third fund with $4.5 billion in commitments, propelling the firm into the upper echelons of the 2016 PEI 300’s top 50. It may only have been founded five years ago, but RRJ now has more than $10 billion under management.

4. NEW YORK REMAINS THE UNDISPUTED FUNDRAISING CAPITAL

 

Firms headquartered in New York raised $360.5 billion in the last five years, more capital than the next five cities combined. North America accounted for 69 percent of the capital raised, with the next biggest fundraising centre – Western Europe – comprising just 16 percent. It seems safe to predict that, barring an act of God or exceptionally vicious regulation, this is unlikely to change anytime soon.

5. THE EUROPEANS ARE COMING

That being said, the US GP community shouldn’t get too comfortable at the top. As we said, no one’s safe. For the first time in several years a second European firm has joined the top 10. French house Ardian is also one to watch for next year’s ranking, having bounced back to 21st. This does not include its latest $14 billion fund, which closed in April and brings its five-year secondaries fundraising total to more than $27.4 billion. Other European giants BC Partners, Apax Partners, Cinven and Permira, all in the top 50, are all in market with multi-billion funds as we speak.