Private equity firms manage investment capital obtained from institutional investors or high net worth individuals (HNWI) to acquire equity ownership of companies through a variety of strategies, including leveraged buyouts and venture capital. Private equity firms operate with long-term investment horizons, typically five to seven years. After obtaining an equity interest in a company, the private equity firm looks to eventually profit through either selling the company outright or through an initial public offering (IPO). When especially large investments are required, these firms often partner with other private equity firms to raise the necessary capital and to reduce their risk exposure. Most firms specialize in one or more industries or investment strategies where they have particular expertise.
- Private equity is an alternative form of private financing, away from public markets, in which funds and investors directly invest in companies or engage in buyouts of such companies.
- Private equity investments are typically available only to high net worth individuals.
- Private equity can take on various forms, from complex leveraged buyouts to venture capital.
- Private equity firms are typically ranked by their assets under management and success in returning gains to investors.
1) Apollo Global Management LLC
Apollo Global Management LLC (NYSE: APO) tops the list of the world's top 10 private equity firms, with just under $150 billion in total private equity assets under management (AUM) for 2015. Apollo was founded in 1990 by Leon Black, formerly of Drexel Burnham Lambert. The company operates globally from its New York headquarters office, with other locations in Los Angeles, London, Frankfurt, and Singapore. It specializes in leveraged buyouts and in buying distressed securities. Notable portfolio investments include Norwegian Cruise Line and Caesar's Entertainment Group.
2) Blackstone Group LP
Founded in 1985 and headquartered in New York, with offices in London, Hong Kong, Beijing and Dubai, Blackstone Group (NYSE: BX) comes in second with approximately $146 billion in private equity assets split about evenly between its private equity and credit divisions. The company invests across a broad range of market sectors, including energy, retail, and technology. Its current portfolio includes residential security firm Vivint, Seaworld Parks and Entertainment, and Leica Camera.
3) Carlyle Group
The Carlyle Group (NASDAQ: CG), with roughly $124 billion in private equity assets, operates through more than 30 offices located in North and South America, Europe, Africa, the Middle East, and Asia. The company was founded in 1987 and is headquartered in Washington. Current portfolio holdings include the Bank of N.T. Butterfield & Son Ltd. in Bermuda, CalPeak Power and financial services firm Edgewood Partners Holdings LLC.
4) KKR & Company LP
KKR & Company (NYSE: KKR), formerly Kohlberg Kravis Roberts & Company, has approximately $98 billion in private equity assets. Founded in 1976 and headquartered in New York, KKR & Company is known for being one of the first firms to engage in large scale leveraged buyouts (LBO), which are still one of the firm's specialties. Among the firm's noteworthy transactions are its 1989 leveraged buyout of RJR Nabisco and its 2007 buyout of TXU, the largest leveraged buyout on record. Among its current portfolio holdings are Alliant Insurance Services and Panasonic Healthcare.
5) Ares Management LP
With principal offices in Los Angeles, Ares Management (NYSE: ARES) operates worldwide with additional offices in London, Hong Kong, and Shanghai. The firm currently has private equity assets in excess of $75 billion. Ares operates mainly in the United States and specializes in providing financing for acquisitions. Its current investment portfolio includes Aspen Dental and Neiman Marcus.
The volume of private equity deals in 2017, with an average deal size of $157 million.
6) Oaktree Capital Management LP
Also headquartered in Los Angeles is Oaktree Capital Management (NYSE: OAK), founded in 1995. The company has other offices in London, Hong Kong, Paris, Singapore, and Seoul. Oaktree specializes in high yield and distressed debt situations and is the largest distressed debt investor worldwide. With approximately $70 billion in AUM, two of the firm's current focuses are on U.S. commercial real estate and corporate bonds issued in emerging market economies.
7) Fortress Investment Group LLC
Fortress Investment Group (NYSE: FIG), headquartered in New York, has approximately $68 billion in assets spread across its private equity, hedge fund, and credit divisions. The company was founded in 1998 and went public in 2007. Among Fortress's varied portfolio companies are RailAmerica, Brookdale Senior Living, Penn National Gaming and Newcastle Investment Corporation.
8) Bain Capital LLC
Bain Capital, founded in 1984 and headquartered in Boston, is one of the most widely recognized private equity firms worldwide. Bain operates globally with additional offices in London, Hong Kong, Mumbai, Tokyo, Shanghai, and Melbourne. The firm currently manages approximately $65 billion in private equity assets. The long list of Bain Capital's acquisitions include such well-known companies as Burger King, Hospital Corporation of America, Staples, the Weather Channel, and AMC Theaters. Its current portfolio includes Consolidated Container Company and SquareTrade.
9) TPG Capital LP
TPG Capital, formerly known as Texas Pacific Group, is headquartered jointly in Fort Worth and San Francisco. TPG also has offices in Europe, Asia, and Australia. With approximately $62 billion in assets, TPG Capital specializes in leveraged buyouts and leveraged recapitalization of distressed companies. Current investments include Airbnb and China Renewable Energy.
Ardian has approximately $45 billion in private equity assets. The company, founded by Dominique Senequier and headquartered in Paris, has offices in London, Frankfurt, New York, and Singapore. Notable portfolio investments include Vinci Park, ESIM Chemicals and NHV Group.