The top 8 business schools produced half of the senior-level professionals in private equity. Even more impressive, 25% of private equity executives are alumni of the top 2 schools – Harvard and Wharton.
In studying our historical data of private equity portfolio company investments & exits, I found that the private equity community, as a group, tends to miss macro-economic trends, often buying at the peak and divesting at the bottom of market cycles. But select private equity firms got the timing quite right and some contrarian firms got it really right.
Below, I list the firms that nailed the timing of macro-economic events in their investment/exit strategies relative to the last major market cycle. See who made the list…
In a previous post, I looked at capital raises from 88,000 Form D filings from 2014 – 2016.
For this post, I mapped the distribution of fund sizes in 2016 from Form D filings (ignoring funds less than $5 million).
Although the fund size distribution is somewhat flatter than expected, there’s a definite concentration in the $100 – $250 million range and a steep drop off for funds with $1 billion or more. This is consistent with the private equity fund sizes we see in our database at www.PrivateEquityInfo.com (we don’t use Form D data in our database).
The next chart shows how this has changed over time, comparing the same 2016 data to 2015 and 2014.
Private equity activity has increased dramatically since the launch of our Research Database in 2005, especially in the middle market – more firms, substantially more capital.
Besides our own internal database, year-to-year changes in Form D filings provide another indicator for private equity capital raising activity.
Using data from 88,000 Form D filings over the past three years, I compared the capital raising trends for private equity funds, hedge funds and venture capital funds.
Here’s what I found…
I previously discussed the trend in median holding periods for private equity-owned portfolio companies. However, there is a significant standard deviation in the data.
The histogram below shows the distribution of holding periods for portfolio company exits in 2016. The data revealed two interesting insights… one driven by macro-economics, the other cultural.
I previously discussed creating a portfolio of 560 publicly-traded stocks based on private equity ownership in each company (the PE-basket). While the last post focused on the overall performance of the PE-basket relative to benchmarks, I thought it would be insightful to look at individual company gains and losses within this basket.
While the average return for the PE-basket was 4.0% over a five-month period, 41 of these companies returned greater than 50%, 11 companies topped 100% and three companies exceeded 200%!
Although private equity firms normally invest in privately held companies, on occasion, some firms will invest in publicly traded companies… or will retain shares in portfolio companies that are now publicly traded.
A quick study of the www.PrivateEquityInfo.com database in late November showed 306 private equity firms collectively held 560 publicly traded-companies in their portfolios.
From these 560 publicly-traded companies, I created an equally-weighted basket of stocks (PE-basket) to track through time. Now that several months have passed, let’s check the performance (thus far) of this PE-basket relative to several benchmark ETFs.
The Private Equity Info real estate data module tracks institutional investors that have a specific investment focus on the real estate sector. These firms include real estate investment trusts (REITs), real estate-focused private equity firms, hedge funds and other institutions that are active debt or equity investors in the real estate market.
We ran a study looking at the geographic distribution of private equity firms and their portfolio companies for European countries.
The majority of private equity firms are concentrated in the United Kingdom, Germany and France.
Industry Trends Report
