10 Most Successful Private Equity Firms in The World

In the investment world, these most successful private equity firms in the world are among the biggest movers and shakers.

Private equity firms have been around for a long time. It could be argued that the first leveraged buyout was performed by J.P. Morgan when he bought Carnegie Steel in 1901, but the first private equity firms as we know them today came later. In 1946, two such firms opened, American Research and Development Corporation and J.H. Whitney & Company. There were few notable buyouts since then, like the acquisition of Pan-Atlantic Steamship Company by McLean Industries, Inc. It was Warren Buffet and Victor Posner who made the new way of acquisition (by using the holding companies to purchase corporate shares) in the 1960s.

The private equity boom came in the 1980s. Many of the most successful private equity firms made their name during that time, although some became quite notorious, like George Icahn and his TWA deal. The fact that there are lawsuits even today goes to show how messed up the whole arrangement was. The corporate raiders during that time have made fortunes of buying out companies and stripping them of all assets. The comparison to vultures has been mentioned many times, for obvious reasons.

In 2003, what is commonly referred to as the Golden Age of Private Equity begun. Some of the Most Successful LBOs and Private Equity Buyouts in History have been made during the 2003 – 2007 period, before the bottom fell off the market in 2008. Almost all of the private equity firms on our list have made huge investments in that period, but not all of them were successful. In fact, a good number of them were total busts, like the second biggest LBO deal in history, the acquisition of TXU by Goldman Sachs, KKR, and TPG Capital. Ever since, the leveraged buyout market has been in a slump, although the Dell deal from 2013 was a sign of recovery. That the future of private equity forms can be bright shows the fact that in latest PEI 300, some 20% of companies are new entries.

PEI 300, which we used as our source, is a publication of Private Equity International. The list is based on how much funds have private equity firms raised in the last five years and is an excellent metric for determining the successfulness of a firm. The 2017 PEI 300 can be seen here.

Private equity is predominantly an American game, so much so that out of 10 most successful private equity firms in the world 9 are based in the United States (five of them in New York). Even the one that isn’t from the United States has deep American roots.

10. CVC Capital Partners

London, United Kingdom

The only non-US company on our list, CVC Capital Partners are based in London. Their origin, however, is American, since the company was founded as the European branch of Citicorp Venture Capital in 1981. They exited Citicorp system in 1993. Immediately following the split, Citicorp invested large funds in CVC’s newly raised $300 million fund. Their orientation was toward leveraged buyouts from the start and by 2000 they were considered the largest and most successful private equity firm in Europe. Among their acquisitions are Formula 1, Breitling, and Petco.

9. Neuberger Berman Group

New York, United States

Neuberger Berman Group, next on the list of most successful private equity firms in the world was founded in 1939. For a while, it was a part of Lehman Brothers. During their collapse, they tried to sell Neuberger Berman to Bain Capital Partners, but in a bankruptcy auction, Neuberger Berman’s management succeeded in offering a competing bid. Today Neuberger Berman is one of rare employee-owned private equity firms. Among their investors are Teacher Retirement System of Texas and the National Social Security Fund of China. They have won 2016 Pensions & Investments’ Best Places to Work in Money Management for companies with more than 1,000 employees.

8. EnCap Investments

Houston, United States

The Houston-based EnCap investment mostly specializes in oil and gas investments. They mostly deal with an independent sector of the industry and have so far made over 170 investments. In 2011-2016 period EnCap has raised more than $21 billion from their investors. Their portfolio includes Earthstone Energy Inc, Resolute Energy Corp,  Eclipse Resources Corp, and many others.

7. Apollo Global Management

New York, United States

When Rudy Giuliani, then the United States Attorney for the Southern District of New York, decided to throw down a hammer on Drexel Burnham Lambert, which led to its bankruptcy, many of its employees decided to abandon ship. Some of them founded Apollo Advisors, later to be renamed to Apollo Global Management. The new private equity company has been very successful and in 2016 they had some $188 billion under management globally. Almost $24 billion of those have been raised in the last five years alone.

6. Advent International

Boston, United States

Advent International, next on the list of most successful private equity firms in the world was founded in 1985 and early on has opened its European branch in London. In 1989, their first investment fund for the European market, called European Special Situations Fund, was raised in the amount of $231 million. Soon after, offices in Frankfurt and Milan were opened. They have made numerous investments in Poland, UK, Bulgaria, and Romania. They didn’t neglect the global markets either and in 2007 they led the restructuring of Yangzijiang Shipbuilding, which they managed to turn into one of the largest IPOs on Singapore Exchange by a foreign-owned company. In the last five years, Advent has raised more than $26 billion from investors.

5. Warburg Pincus

New York, United States

Warburg Pincus can trace its origin to 1939 and the foundation of E.M. Warburg & Co. The company has decided early on that their sole business would be private equity and have been true to that decision in the last 50 years. With more than $30 billion raised in investment funds in the last five years, Warburg Pincus is highly ranked among the most successful private equity firms in the world. Their investments are spread over 40 countries all over the world.

4. TPG

Fort Worth, United States

TPG stands for Texas Pacific group, a name chose because the founding partners were based in Fort Worth and San Francisco. The group came together over the acquisition of the Continental Airways, which was often praised as a model buyout, unlike the TWA fiasco. Since that initial success, TGA has been negotiating deals like AT&T Paradyne, J. Crew, Petco, Gemplus SA, Telenor, Burger King, Metro Goldwin Mayer, and SunGard. They were also involved in the TXU deal, which didn’t go quite as planned for all involved.

3. The Carlyle Group

Washington DC, United States

The Carlyle Group, next on the list of most successful private equity firms in the world was founded in 1987 by five partners (William E. Conway, Jr., Stephen L. Norris, David M. Rubenstein, Daniel A. D’Aniello and Greg Rosenbaum). They named their company by their favorite meeting place, Carlyle Hotel in New York. Since then, the firm was quite successful and in the last five years alone they have managed to raise more than $40 billion. They did come under heavy flack in 2001 when it was discovered that Osama bin Laden’s brother Shafiq was a business associate of theirs. Add in the fact that President George H. W. Bush served as an advisor to the company and it is easy to see why the Carlyle Group is a part of almost every 9/11 conspiracy theory.

2. KKR

New York, United States

We are continuing our list of most successful private equity firms in the world with KKR (AKA Kohlberg Kravis Roberts) that was founded in 1976 by Jerome Kohlberg, Henry Kravis, and George Roberts after their dispute with their former employer Bear Stearns. Only a year later they have managed their first buyout. A.J. Industries was bought with funds from several investors. By 1978 they were managing a $30 million investment fund, but the real breakthrough came in 1981 when they secured Oregon State Treasury’s public pension fund for their flock of investors. Their biggest deal (and the biggest leveraged buyout in history, period) was RJR Nabisco. For a fantastic sum of $25 billion ($31.1 billion with debt, which is $66.9 billion in 2017 dollars), KKR (minus Kohlberg, who retired a few years later) secured a deal that would secure them a place among the biggest private equity firms in the world.

1. Blackstone

New York, United States

What started as a consultant company for mergers and acquisitions in 1985 has been since developed into one of the most successful private equity firms in the world. Blackstone is considered the largest alternative investment firm on the planet. In the last five years, they have raised more than $58 billion for their ventures. Some of their most notable acquisitions include: TDC, Equity Office, Freescale Semiconductor, Michaels Nielsen Holdings, Orangina, Travelport, United Biscuits, RGIS Inventory Specialists, Biomet, and Hilton Worldwide, featured on the list of the most successful LBOs and private equity buyouts in history.