Which PE firms are on the rise?
Saw another thread asking which firms are on the downhill, so wanted to see what people thought on the flip side of things.
Saw another thread asking which firms are on the downhill, so wanted to see what people thought on the flip side of things.
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Based on the WSO Dataset, there isn't specific information about which private equity firms are currently on the rise. However, the discussions often highlight trends and experiences that could give insights into firms that are performing well or gaining prominence in the industry. For a more detailed and updated perspective, I recommend checking out the latest threads in the Private Equity section on Wall Street Oasis, where members frequently share their insights and experiences with various firms.
Sources: Top Growth firms comp out of undergrad, Best Fintech Firms?, PE firm with, How to Be King of Your Own Private Equity Firm, Corporate banking on the rise?
accel kkr
thoma
cvc
Shore capital
I am skeptical at best on Shore. They borderline pioneered the practice roll-up space that is stupid expensive now. I'd argue their best returning funds are all behind them at this point. They tout never losing money on a deal but I know for a fact they're shutting down multiple companies in their latest fund and they'll be donuts return wise. Everyone there is smart but the space they play in is now very saturated and their fund sizes have kept growing, bad combo for producing 3-4x returns for LPs...
Interesting! Definitely have to keep an eye on them. Which companies?
Very familiar with the firm too and heard similar 'negatives' from a friend who worked there. Great culture though and do enjoy speaking to the few people I know there (mostly on the operating side).
Dude are you the guy that keeps spamming about Shore in all these threads? It's an OK firm at best, man.
Shore Capital kinda sucks
HIG
Any PE firm that is (1) raising significantly larger funds successively, especially with a large step up in a fundraise in 2H2023 - Present when conditions deteriorated, and (2) Has solid performance across their recent vintages and not too many of their current portcos look like they were bought at way too high of a valuation or are on fire, and (3) hasn’t experienced significant turnover, can be considered to be funds “on the rise” these days. Off the top of my head, some firms (not necessarily “up and coming” in that they can be both established and steadily “on the rise”) that fulfill the above criteria include
- Arcline
- ACP
- Genstar
- Gemspring
- Greenbriar
- H.I.G.
- Nautic
- NMC
- Veritas
At the end of the day, IMO these funds (not exhaustive list) are “on the rise” in that they’ve displayed good traction and stability historically and are positioned well to continue experiencing great traction and growth
STG?
Na
Agreed, perhaps a bit too matured but would add CD&R, H&F to the list as well
are you joking?
The responses in this thread are honestly so stupid. It's all analysts and associates who've never worked in PE finding out about household names for the first time and saying: "yea, heard they're dope."
Not trying to argue and def not an expert. just basing it off of 1) fund size growth, 2) solid performance across vintages. Just some public data (may not be very accurate) - H&F: $3.5 bn (top quartile) -> $8.5 bn (top quartile) -> $9 bn (top quartile) -> $11 bn -> $24 bn -> $20 bn; CD&R: $5 bn (top quartile) -> $6.5 bn (top quartile) -> $10 bn (top quartile) -> $16 bn -> $26 bn. True they might be a bit large / too established to be called up-and-coming.
Which ACP is this?
Arlington Capital Partners
One of the best posts I have seen, and although not an all-encompassing list a decent chunk of firm names to consider. Really helpful for headhunter calls as example firms to give, really appreciate it!
Gemspring has been struggling to hire an associate for months now, I've probably gotten 20+ emails about their associate roles from SG at this point
Arcline is in big trouble IMO. Haven't returned shit to shareholders and are going to have many sell side processes return less than portcos are marked at. They bought up a ton of shit while money was cheap and leverage was readily available.
Agreed, think they paid a crazy multiple for Pride and have heard similar for other portcos
This. They’ve been paying ludicrous prices for assets to clear the field (have seen this on multiple processes competing against them). On a couple they seem to have been right about their “angle” but not the case most of the time. Short of some really frothy IPO exits it’s hard to see how the math works.
Would add gridiron capital as well
Some good momentum from the two Euro HC funds (GHO / ARCHIMED). ARCHIMED in particular has had a pretty steep trajectory from $150M inaugural fund to $3.5B latest fund raised in 2023.
Funnily enough both are spinoffs of 3i Group...
Seems like KPS is killing it
+1
Absolutely
I’d really take a look at some of the infra funds. Infrastructure as a sector is experiencing some incredible tailwinds and a lot of the funds are growing like crazy with successively larger funds.
Some big names are:
- GIP/Blackrock (just bought, an established player but consistently great top fund)
- Stonepeak (okay returns)
- I Squared (the most meteoric rise of the bunch and an extremely dominant player now with top tier returns. Not that infrastructure investor awards are everything but they were named fund manager of the year)
- DigitalBridge (infrastructure with tech focus, large tailwinds here as well)
- Blackstone (has grown quickly with surprisingly good returns given their larger targeted equity check size)
Obviously many of the established names include:
- Macquarie
- Brookfield
- EQT
Some people not in the infra space will jerk off names like Apollo b/c of their name but their infra funds are no where near their flagship PE funds. Maybe in the future they’ll be better.
.
Thanks, great point. My knowledge of KKR appears to be a bit out of date, fixing that now.
Infra is the play right now
Del
I’ve had a bit of exposure to infra and digital infra, and the way you threw out the many names that have digital infra exposure doesn’t make sense. This isn’t a rising tide lifts all boats kind of environment
Digital infra has tailwinds, but it also has a lot more commercial risk (both ways) than conventional infra. Some of these players have only really operated during the heydays and invested at very frothy valuations.
For one of the firms on your list, I’ve seen them:
- retain and promote senior execution folks (eg. VPs, SVPs) who don’t understand basic corporate finance and LBOs. Not the end of the world, but obviously problematic for calculation of returns that they show the IC
- rely heavily on bridge financing not to juice returns but because they overbid vs. actual dry powder available and had to syndicate this out in co-invest. The bridge lender probably figured this out and doubled the interest rate to near core infra PE IRR levels last minute… and they still took the financing, which raises questions about their ability to fund the capex for their portcos without going cross fund
- grow AUM vs. actual fund size aggressively using co-invest, but this meant that the co-invest was practically free - a miserable double digit bps in mgmt fees at best. This was during an era of plentiful capital, so now imagine co-invest demand in an era where fundraising is already tough
- I don’t think they’ve delivered many good exits other than splitting yieldcos and devcos. The single non yieldco / devco exit I saw was them just selling a dream on to a greater fool.
And then more generally on the industry:
- tower deals aren’t as great in the rest of the world ex-US for multiple reasons. US towers are done and dusted so you HAVE to look at ex-US for any meaningful investment.
- data centre deals too. There’s a huge amount of annual commercial risk unless you serve hyperscalers, and hyperscalers are smart and will squeeze you on margins. HS contracts can be as short as 3-5 years, and while everyone is claiming that they’re super sticky, the thing is, to date, HS have never had a de growth / slowing growth scenario in cloud / other DC-related demand. Just wait till they do.
- fibre (whether land or subsea): this shit is very capex intensive + you seem to be a sitting duck for technological obsolescence to some degree. This is also a super regulated industry and depending on the country you’re operating in, you might be a few government policies away from getting fucked. Some players have taken the build-and-they-will-come approach, especially in last mile fibre, and I think that was already attempted several decades ago in subsea cables… and the outcome was multiple bankruptcies
Loved your comment. Sounds like you're talking about Digital Bridge?
Not sure I'm as bearish on digital infra. It may not be as projectable long term as other types of infra but the macro trends clearly support future demand for towers/DCs/fiber
Open to other opinions, but based on what I've heard regarding returns and fundraising (from my buddy in secondaries / FoF / Coinvest):
Smaller (as in not MF):
- Alpine
- KPS
- The Jordan Company
- AKKR
- HIG
Larger:
- TB
- CD&R
- H&F
- Permira
- CVC
Curious if there's any counterpoints to the above.
Good post and somewhat helpful, but the firms you mentioned are all UMM/MFs that are already known as being top-tier performers. Not exactly new firms on the rise, but rather just established firms further growing share. Still upvoting, but feel like this isn't super value additive sine almost everyone knows which MFs are rising vs. which ones are relatively falling.
A lot of these MFs aren't growing because they're quality firms. They're raising larger funds because allocators know they need to be investing in PE to hit their targets but don't know how to select the best funds in market. No one is going to be fired for allocating to CD&R or H&F but they're not getting top quartile returns either. The only big names left off here are the ones publicly traded or with heavy outsized ownership. I could probably guess which FoF your friend works at.
Permira's latest fund is doing absolutely terrible and the only reason they upsized fund size is because 90% of the fundraise was done when the market was stupid hot. H&F has struggled recently and will close well under target, still the top place to work in PE for me. The rest is ok.
based on news reports, H&F was targeting 24b, and closed on 22b for their flagship...wouldn't call that "well under target"
Permira is getting cooked
Surprised no one is mentioning TA, last 3 funds have been absolute top decile (Check out HEC Paris rankings) and fund size has gone from 8 to 18.. they closed their last fund without breaking a sweat in a couple of months unlike a Vista who huffed and puffed over 2 years to hit 20b
Why is Vista always the standard that so many firms are compared to on this site? Probably says something…
.
TA is certainly a great shop, and has been on a meteoric rise along with FP, in terms of tech PE shops (mainly tech PE at this point at least) fundraising.
However, to reply to the original comment, in the other thread "Which PE Shops are going downhill", this is also the exact same person who attempted to group Vista, TCV, H&F, and Silver Lake in the same bucket as firms like Carlyle (actually on a severe decline, unfortunately), saying "they will seem fine for now but the next fund is going to be half the size and partners will leave"
Just because a few firms overextended assets in 2021 certainly does not mean their 20+ years of excellent track record will simply go down the drain - it is crystal clear you are not at a UMM/MF, or maybe even PE for that matter, as anyone who actually is would laugh at a statement alleging that Vista, H&F, and Silver Lake, easily 3 of the top tech PE investors ever are going to have future funds "half the size and partners will leave". The statement becomes even more laughable when you consider H&F and Vista just raised $22B and $20B funds.
It is also fine that some of these firms "huffed and puffed" for fundraising - again, anyone at a MF or similar competing firm knows how rough the fundraising environment has been - the roughest the asset class has seen since the GFC. And if you pair that with firm-specific reasons, such as TB raising at the exact same time as Vista is going through RFS's tax fraud - of course it is going to take longer? Bain Capital has dealt with some issues with returns, yet they are continually raising funds and maintain their place as a strong mega fund?
These should all be common sense points for anyone with just a few years of experience in private equity.
To add some more humor to his comment, @VP it turns out you are right about randomguy's experience, or lack thereof, in PE.
Comment from 11 years ago says he's a "BB Associate based in Mumbai", so seems we've got an investment banker on the other side of the planet commenting on NAPE performances. Nice!
Another comment dug up: "Damn, I wish there were some real men in US PE." LOL
I interpreted this thread to be asking about up and coming firms that may be overlooked, underappreciated or unknown, in their 1st, 2nd, or 3rd vintages. Not a firm that was founded in 1968. The other comments in this thread are also wild...citing firms like Veritas and CD&R...like what are we doing here?
Any input on FP?
Think second or third best performing buyout fund in the world according to HEC
Surprised no one has mentioned Sixth Street. Went from 30B to 75B and has a similar access to capital like with Apollo and Athene.
PE is a small part of what they do is why
That's slated to change. By contract they couldn't do buyout deals till 2-3 years back given the spin-off from TPG.
Their main group is also strategic capital which is harder to classify just given their flexibility across the capital structure. It is very similar to the tac-opps, special sits groups at comparable funds except it's what SSP is known for.
Why does Sixth Street have similar access to capital like Apollo and Athene?
Sixth Street bought Talcott a couple of years back which gives them access to permanent capital. Takes off pressure of deploying capital for the sake of deployment.
Kingswood Capital
HAHAHHAHAHAHAHHAHAAH
Have that Save Mart bs, and other dumb stuff according to a CEO of one of their other portcos... not so sure.
Whats the ceo saying? Just curious for anonymous opinion
Trivest
Gauge
Anyone know how GA has been doing? Know they’ve had a few killer HC exits over the past ~2-3 years but how’s their tech / other verticals performed?
Came here to post KPS. I am surprised how cleanly their strategy has scaled. I wish their founders would do more interviews.
How are the Golden Gate spin-offs doing? Arcline, Percheron, Lone View?
Have heard good things but don't know anyone who works there
Stellex
What’s the word on Stellex? Culture, analyst program, etc. Much appreciated
AKKR raised a $2.85bn buyout fund in 2020 and $4.4bn in 2023. Have had strong returns as well
TA, Arsenal, GHO, and Nautic are all making moves in healthcare.
How's the prospect for Arsenal? Looks like they raised ~$5.5bn in two funds in 2022 and made a lot of senior hires recently, but it's not talked about much on this forum.
Which firms are doing well in the Secondaries and Co-Invest space?
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