There are a number of prominent private equity firms located in San Francisco due in part to its proximity to Silicon Valley, the heart of the tech industry in the United States. Google, Apple, Facebook and Yahoo have their headquarters in Silicon Valley. It is also home to many of the more prominent tech startups. For these reasons, San Francisco is a hotbed of private equity deal making. The following are the five largest private equity firms with significant operations in San Francisco.
KKR & Co. L.P.
KKR & Co. L.P. (NYSE: KKR) is one of the largest private equity funds in the world. The company had around $99 billion in assets under management, or AUM, during the second quarter of 2015. It was formed in 1976 by former bankers at Bear Stearns and was a pioneer of the leveraged buyout deal. The most prominent deal the company made was the leveraged buyout of RJR Nabisco in 1989, the largest ever at the time. The saga was chronicled in a book and TV movie called "Barbarians at the Gate."
The company had an initial public offering, or IPO, in 2007. Its shares trade on the NYSE. KKR has performed a number of high profile deals since that time, including Dollar General; Biomet, a medical devices company; and First Data, a credit card processor. In 2014, KKR bought Sedgwick Claims Management Services for around $2.4 billion. The company has also had major investments in a Chinese poultry producer and a lighting electric firm.
The Blackstone Group L.P.
The Blackstone Group L.P. (NYSE: BX) is another major private equity firm with a significant presence in San Francisco. The company had around $300 billion in AUM during the first quarter of 2015. It was founded by Steve Schwarzman and Peter Peterson in 1985 as a mergers and acquisitions firm. BX had a $4 billion IPO in 2007. The company is organized into four main divisions.
The corporate equity group manages the private equity funds that invest in leveraged buyout transactions. The investment bank arm offers its mergers and acquisition advisory services, restructuring services and fund placement services. The marketable alternative asset management arm manages the company’s hedge funds, mezzanine fund and senior debt vehicles. The real estate divisions manage its real estate investment funds.
BX has been involved in a number of different deals along a wide spectrum of sectors. It acquired Hilton Worldwide, the hotel operator, in a $26 billion buyout in 2007. Some experts identified this deal as the high-water mark of a boom in leveraged buyouts that was brought to an end by the 2008 financial crisis. The company, along with NBC Universal and Bain Capital, bought the Weather Channel in 2008. In 2013, it bought a 20% interest in Versace, the Italian luxury brand. It bought the Las Vegas Cosmopolitan resort from Deutsche Bank for $1.73 billion in 2014.
TPG Capital, formerly the Texas Pacific Group, is another major private equity firm. It has around $74.8 billion in AUM as of 2015. The fund was created in 1992. Although headquartered in Fort Worth, it has a significant presence in San Francisco. The company also has offices in Europe, Asia and Australia. It invests across many industries, including the consumer sector, media and telecommunications sector, industrial sector and technology sector.
One of TPG Capital’s most notable initial investments was in J. Crew when it acquired an 88% interest in the company in 1997. Although the deal struggled at first, TPG Capital was able to turn J. Crew around and have an IPO in 2006. Other company investments include Beringer Wine, Ducati Motorcycles, Del Monte Foods and Oxford Health Plans.
TPG Capital has a number of different platforms. The TPG Growth platform is for smaller buyouts and growth equity investments. The TPG Biotech platform invests in life science ventures. The TPG Alternative &; Renewable Technologies platform is focused on developing alternative and renewable technologies. TPG Real estate includes two divisions. TPG Real Estate Partners invests directly in real estate. TPG Real Estate Finance Trust is a debt origination and acquisition platform. The company also has additional platforms.
Warburg Pincus is another company that has been involved in private equity since 1966. It has approximately $35 billion in AUM. The firm traces its roots back to 1939 in New York City. It is structured as a global partnership. Warburg Pincus has completed more than 120 IPOs, raising around $15 billion in public markets worldwide. The company has around 120 companies in its active portfolio as of 2015.
Warburg Pincus raised nearly $4 billion for a new energy-focused private equity fund in 2014. The fund is designed to invest in the shale oil and gas industry in North America. It focuses on exploration and production companies, as well as oil field services and mining. Warburg Pincus had previously invested nearly $9.5 billion in other energy companies. These investments include the oil and natural gas company Antero Resources and the Canadian oil sands company MEG Energy. Some of Warburg’s larger investments include Aramark, Bausch &; Lomb, Neiman Marcus and Nuance Communications.
Permira is a global private equity firm with offices in San Francisco. Permira has around $41 billion in AUM. The company was founded in 1985. It focuses on long-term investments in companies with the objective to improve their performance and engage in sustainable growth. The company’s funds have made over 200 investments in a number of sectors including consumer, financial services, health care, industrials and technology. Some of the more well-known consumer companies include Dr. Martens, Hugo Boss, Galaxy Entertainment and New Look. The company invested around $200 million in LegalZoom in 2014.
As of August 2015, some of Permira’s other more recent investments include TeamViewer, a remote support software provider, and Metalogix, a provider of online management tools. Other investments include a Japanese sushi chain and Ancestry.com. The company further completed an acquisition of Informatica in August of 2015. Informatica is a provider of data integration software.