Private equity firms play a crucial role in the world of finance, managing investment capital from institutional investors and high-net-worth individuals (HNWIs) to acquire equity ownership in companies through various strategies. Their long-term investment horizons, typically five to seven years, allow them to generate substantial profits over time. Private equity firms specialize in industries or investment strategies where they have expertise, and their success depends on strategic decision-making and effective management of their portfolios.
In this article, we will explore ten of the top private equity firms, detailing their history, investment strategies, notable holdings, and assets under management (AUM). Additionally, we will delve into the compensation levels within the private equity industry, highlighting the earnings of managing partners, associates, and vice presidents. Lastly, we will discuss the distinction between publicly traded and private private equity firms.
The Blackstone Group Inc.
The Blackstone Group Inc., founded in 1985 and headquartered in New York, is a leading private equity firm with a remarkable $941 billion in total AUM. The firm invests across various market sectors, including energy, retail, and technology. Apart from private equity, Blackstone also holds significant investments in real estate, credit, and hedge fund solutions. Some of their notable portfolio companies include Refinitiv, Ancestry, and Bumble.
KKR & Co. Inc.
KKR & Co. Inc., established in 1976 and based in New York, manages a total AUM of $479 billion. One of the pioneers in large-scale leveraged buyouts, KKR has been involved in prominent transactions like the RJR Nabisco buyout in 1989 and the TXU acquisition in 2007. Fiserv Inc., Optiv, and PetVet are among their current portfolio holdings.
CVC Capital Partners
CVC Capital Partners, with nearly $127 billion in total AUM, operates private equity platforms managing $87 billion of assets. Founded in 1981 and boasting 25 offices worldwide, CVC’s diverse private equity portfolio includes over 110 global companies.
The Carlyle Group Inc.
The Carlyle Group Inc. manages a total AUM of $376 billion, with its corporate private equity unit holding $167 billion. Founded in 1987 and headquartered in Washington, D.C., Carlyle has a wide reach with 26 offices across five continents. Supreme and Workforce Logiq are some of their notable current holdings.
Thoma Bravo
With an impressive $114 billion AUM, Thoma Bravo focuses on providing capital and strategic support to software and technology companies. Their portfolio includes well-known companies like McAfee, Conga, and Anchorage.
EQT
EQT A.B., based in Sweden, boasts a total AUM of approximately $81.7 billion. Founded in 1994, the firm operates in 24 countries across Europe, North America, and the Asia-Pacific region, with Flying Tiger Copenhagen as one of its best-known portfolio companies.
Vista Equity Partners
Vista Equity Partners invests exclusively in software, data, and technology-enabled organizations, with over $86 billion in AUM. The firm has strategic investments in various industries, including healthcare, advertising, and risk management.
TPG Capital
TPG Capital, with a total AUM of $109 billion, was founded in 1992 and is headquartered in San Francisco. The firm has made noteworthy acquisitions, such as Continental Airlines, Petco, and Burger King.
Warburg Pincus LLC
Warburg Pincus LLC manages more than $73 billion in total AUM, invested in over 235 companies. With its roots dating back to 1939, the firm has a global presence with offices in 13 countries.
Neuberger Berman Group LLC
Neuberger Berman Group LLC holds $460 billion in total AUM, including $70 billion in private equity. With over 25 years of experience in alternative investments, the firm has a strong international presence.
Compensation in Private Equity:
Private equity is a highly lucrative career, with managing partners earning an average cash compensation ranging from $1.1 million to $3.7 million for firms with less than $20 billion in AUM. Partners and managing directors earn an average compensation of $596,000 to $2.2 million, while associates and senior associates receive $193,000 to $315,000, depending on the firm’s AUM.
For associates, Apollo Global Management, KKR & Co., and Brookfield Asset Management are known to pay the highest figures, with Apollo Global Management being reputed as the highest-paying private equity firm, offering associates upward of $400,000 per year.
Vice President Compensation:
Total compensation for Vice Presidents in private equity varies based on the AUM of the firm. In 2019, those at firms with less than $500 million in AUM earned a mean total cash compensation of $329,000. For firms with $10 billion to $19.99 billion in AUM, the mean total cash compensation was $592,000.
Publicly Traded Private Equity Firms:
Among the top private equity firms, Apollo Global Management, The Blackstone Group, The Carlyle Group, and KKR & Co. are publicly traded. In contrast, Advent International, Bain Capital, TPG Capital, and Warburg Pincus are private companies.
Conclusion:
Private equity firms play a vital role in the financial landscape, managing substantial investment capital to acquire equity ownership in companies and generate profits over the long term. The top private equity firms listed here are known for their extensive experience, diverse portfolios, and successful investments across various industries. The compensation levels within the private equity industry reflect its lucrative nature, with significant earnings for managing partners, associates, and vice presidents. The distinction between publicly traded and private private equity firms offers investors various options to engage with this dynamic sector.
