It’s been a wild ride in the stock market over the past few years. The year 2021 brought huge market gains but also a great deal of speculative excess in fields such as SPACs and disruptive growth companies. In 2022, there was an abrupt bear market that left many investors with large losses. Then the market came roaring back in 2023, with large-capitalization tech firms enjoying some of their largest annual gains ever.
While the market is currently on an upswing, the unrelenting volatility has many investors looking for alternatives. Private equity has been one of the biggest winners in recent years. Many private equity firms have been able to deliver market-beating returns while experiencing less volatility than the stock market indexes. Understandably, this is a most appealing combination.
How’s that possible? Before getting into the 10 biggest private equity firms in the world, here’s an overview of the private equity space.
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How Private Equity Works
Private equity firms operate in a unique part of the marketplace. Instead of owning publicly traded stocks or bonds, private equity can buy up whole companies and seek to improve and optimize their performance. Private equity can outperform for several reasons. These firms often have access to smaller and more growth-focused companies than what is available on public stock exchanges. Having a controlling ownership position gives PE operators the ability to make needed changes at companies without outside interference. And private equity firms are often experts in selling their positions during bull markets, crystalizing generous returns for their partners.
Institutional investors such as pension funds, endowments and sovereign wealth funds have rushed to deploy capital into private equity investments in recent years to take advantage of these unique traits.
Which private equity firms are making the most of this opportunity? Each year, Private Equity International releases its PEI 300 list of the largest PE firms worldwide.
The latest PEI 300 report was released last year and covers data through March 2023. The list tabulates the total amount of capital raised over the past five years, ranging from 2018 through the onset of the pandemic and well into the ensuing global economic recovery. To be eligible, a PE shop had to have raised at least $2.08 billion over the past five years. This particular edition of the list is exciting as it has a new No. 1 firm along with four PE shops which jumped into the top 10 for the 2023 edition.
Here are the top 10 PE firms in the world by capital raised over the past five years, according to PEI:
| Rank | Private equity firm | Money Raised Over Five Years |
| 1 | Blackstone Inc. (ticker: BX) | $125.6 billion |
| 2 | KKR & Co. Inc. (KKR) | $103.7 billion |
| 3 | EQT AB (OTC: EQBBF) | $101.7 billion |
| 4 | Thoma Bravo LLC | $74.1 billion |
| 5 | Carlyle Group (CG) | $69.7 billion |
| 6 | TPG | $55.0 billion |
| 7 | Advent International | $52.9 billion |
| 8 | Hg | $51.0 billion |
| 9 | General Atlantic Service Co. LP | $48.7 billion |
| 10 | Warburg Pincus | $48.5 billion |
Blackstone Inc. (BX)
Welcome back to the top. Blackstone returned to its usual spot atop the league table in 2023. After slipping to number No. 2 in 2022, Blackstone regained its lead with a massive $125.6 billion of funding raised over the past five years. This is rarefied air; in 2022, only one firm topped the $100 billion mark in the PEI survey. Now Blackstone has moved well past that threshold. It’s not just fundraising for private equity either. As measured by assets under management (AUM), Blackstone is dominant. Its AUM reached the $1 trillion mark in 2023.
Public investors are able to participate in Blackstone’s success. Blackstone shares are publicly traded. BX stock has appreciated roughly 300% over the past 10 years.
KKR & Co. Inc. (KKR)
KKR managed to make it to the No. 1 spot on the PEI 300 list in 2022. But its stay was short-lived, as Blackstone dethroned it in 2023. That shouldn’t be too surprising, given Blackstone’s enormous size. However, KKR is a formidable player as well. With more than $500 billion in AUM, KKR has extensive investment management operations and has access to tremendous dealmakers and opportunities. KKR was able to put those resources to work to raise more than $103 billion in total funding deals over the past five years. Since inception in 1976, KKR has achieved cumulative gross internal rates of return, or IRR, of more than 25% annually. That’s more than double the compound annual growth rate of the S&P 500 over the decades, which is about 10%.
EQT AB (OTC: EQBBF)
Hailing from Stockholm, Sweden’s EQT is a private equity firm on the rise. It jumped from No. 6 to No. 3 in the rankings in 2022. For 2023, it maintained that spot while lifting its total funding figure past the $100 billion threshold. The firm continues to grow, such as with 2022’s $7.5 billion acquisition of Baring Private Equity Asia, helping expand the firm’s footprint outside of Europe. Management has prioritized growing its exposure to fast-growing Asian markets.
The stock market is not particularly enthused with EQT right now. The company, which is publicly traded, still sees its shares trade far below their prior 2021 highs. However, EQT’s recent results have been more promising. If and when the Chinese economy picks back up and Asian emerging markets return to a bull market, EQT should be well positioned to prosper. While the American economy is currently flying high, EQT’s contrarian Asian bet could help it continue to land near the top of this list in the years to come.
Thoma Bravo LLC
Thoma Bravo is an American private equity firm which focuses on the tech sector. In particular, Thoma Bravo is a feared M&A player in the software space, as it is known for swooping in and buying firms at discounted prices. Thoma Bravo was highly active during the recent software market downturn, buying out Medallia, Anaplan, SailPoint and Coupa. All four of these were deals worth at least $6 billion, which speaks to Thoma Bravo’s ability to put large sums of money to work when opportunities arise.
Not all of Thoma Bravo’s deals work out. In 2021, for example, the company invested a reported $125 million into the cryptocurrency exchange FTX, which would go on to fail in dramatic fashion. However, that comes with the territory of investing in cutting-edge technology. On the whole, Thoma Bravo has made a number of tremendous deals, giving it access to a continuous stream of investor capital.
Carlyle Group (CG)
Carlyle Group is based in the nation’s capital. As a Washington-focused operation, Carlyle specializes in investments in companies tied to the government and federal agencies. It operates in sectors such as aerospace, health care, media and government services.
Carlyle is publicly traded and its stock price went through a slump in 2022 amid a CEO change and challenging market conditions. However, things are back on the upswing. Carlyle shares have surged by about 50% over the past six months. The rally appears to be on solid footing, as the company just raised its 2024 guidance and shares are still going for less than 12 times forward earnings. In addition, election-year-related uncertainty could give Carlyle opportunities to deploy capital on favorable terms this year.
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TPG
The top five firms in the PEI 300 have a solid grip on their position in the league tables. Things get more competitive at No. 6, however. All of the firms between No. 6 and No. 10 have raised between $48.5 billion and $55.0 billion over the past five years. That is to say that it’s a fierce battle to win out among this tier of private equity shops. For 2023, TPG was the top dog within this class, raising $55 billion over the past five years. This was also a pleasant surprise, as TPG had been outside the top 10 in the prior year’s list.
Founded in 1992, TPG is a fast-growing private equity firm that has now reached $222 billion in total AUM. It has focused on opportunities in Silicon Valley and other key technology and growth markets. Today, the company has more than 300 active portfolio companies headquartered in more than 30 countries. With the current boom in tech fields such as artificial intelligence and semiconductors, TPG could be set to keep rising up the leaderboard in the years to come.
Advent International
Advent International was founded in 1984 as a spin-off from another investment management firm. Based in Boston, Advent has grown over the years. It is known for its large international footprint, with it being an active dealmaker in regions such as Eastern Europe and Latin America that are less common stomping grounds for American PE shops.
Advent was recently in the news with its noteworthy $6.4 billion acquisition of Maxar Technologies in 2023. This builds on Advent’s proven expertise in the defense and security businesses. Maxar has a large operation in geospatial intelligence and space solutions. These functions have proven increasingly vital with the outbreak of active conflicts in Ukraine and the Middle East. Advent was a new entrant to the PEI 300 top 10 in 2023, but it may be able to continue its climb given its unique positioning within the industry.
Hg
Hg is another newcomer to the top 10 portion of the PEI 300 list. Based in London, Hg is one of the largest European private equity firms out there. To that point, in 2020, Hg orchestrated the buyout of software company Visma. At the time, the $12.2 billion deal was the largest European software buyout in history.
Hg was only founded in 2000, making it one of the youngest firms on this list. It also has around $55 billion in total AUM, making it one of the smaller overall players in the top 10. But it’s punching above its weight in terms of money raised thanks to its successful track record and operations in sectors such as software that are currently attracting large amounts of investor capital.
General Atlantic Service Co. LP
It was a bit of a down year for General Atlantic, as the firm slipped from No. 7 in 2022’s ranking to No. 9 in the most recent edition of the PEI 300. However, it should be noted that the firm’s total five-year fundraising haul increased from the year before; rather, it slid down the list because rivals like Hg raised funding even more quickly.
General Atlantic has a global operation and is heavily involved in emerging markets such as India. Given that investors are less focused on those sorts of opportunities today, it’s not surprising that PE companies in fields like software are currently seeing higher fundraising velocity. However, General Atlantic has been around since 1980, when it began operations as the charitable foundation of billionaire Charles Feeney. Given General Atlantic’s long track record and diversified operations, it wouldn’t be a surprise to see it rebound up this list in coming years.
Warburg Pincus
The venerable PE shop Warburg Pincus re-entered the top 10 list this year. Warburg Pincus has been in business as a private equity shop since 1966 and it traces its original roots back to Eric Warburg’s banking business which was founded in New York City in 1939.
Warburg Pincus has a lengthy history in the capital markets. Remarkably enough, more than 140 Warburg Pincus portfolio companies have gone on to successful initial public offerings (IPOs) across 13 different global stock exchanges. Warburg Pincus is willing to go to markets and sectors that are out of favor; it has made big moves in areas such as the energy industry, giving it deal flow that other PE shops might overlook. Reportedly, BlackRock was in talks to acquire a majority stake in Warburg Pincus in 2023, but this fell through, keeping Warburg Pincus independent for at least the time being.
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The Top 10 Largest Private Equity Firms in the World originally appeared on usnews.com
Update 02/22/24: This story was previously published at an earlier date and has been updated with new information.
