‘Billion Dollar’ Private Equity Club Accounts for 52% of the Industry

Asset class faction and interest has grown by almost 50 members since last year.

A club of the largest private equity investors has grown in 2018, with allocations accounting for 52% of the total industry assets in the space.

Similar to its hedge fund counterpart, the “Billion Dollar Club” for private equity consists of 359 members that invest $1 billion or more to the asset class. Its top ranks include the Canada Pension Plan  Investment Board (CPPIB) and Kuwait Investment Authority, which allocate more than $50 billion to the sector.

The titanic asset club holds a whopping $1.54 trillion in total private equity investments, reports data firm Preqin. The entire industry commits $2.97 trillion to private equity.

Increasing private equity interest has expanded the club by more than 50 members in the past year. In 2017, the billion-dollar club had only 315 members and $1.24 trillion in combined private equity assets.

Christopher Elvin, Preqin’s head of private equity products, said that while the group’s industrial influence is wide, it is “striking that in 2018 just 350 investors account for more than half of total AUM of the asset class.” He added that the club’s near-50-member growth from 2017 indicates “the growing importance that private equity investments are having for institutions with demanding returns objectives.”

The top investors are public pension funds, which represent one-third of the group’s members. Sovereign wealth funds are the club’s second-largest investors, despite occupying only 4% of its members.    

Most billion-dollar club members are North American (54%). Nearly one-third of affiliates are European (28%). The rest of the world comprises the last 12%.

Elvin called the consortium “a mark of confidence” in the private equity industry, but said that it creates challenges for smaller investors and fund managers alike. “Club members may make it more difficult for other investors to access vehicles that are already in high demand, and the size of their commitments mean that even though they are more likely to consider first-time funds than other investors, they may be difficult to accommodate for many fund managers,” he said.

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