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Pension schemes allocate more funds to top 10 private equity firms

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GLOBAL - The top 10 private equity firms occupy a strong position with almost a fifth of global investors making commitments to funds managed by these companies, according to a report published by Preqin. 

North American pensions are leading the way, with a third of them having already invested in funds managed by the top 10 private equity firms, including Apax Partners, Apollo Global Management, Blackstone, Carlyle, CVC Capital Partners, Kohlberg Kravis Roberts, Oaktree Capital Management and TPG.

California Public Employees’ Retirement System (CalPERS) is currently the largest institutional investor in private equity in the world, with $32.8bn (€23bn) allocated to this asset class.

According to Preqin, the pension fund’s exposure to funds managed by the 10 top firms represents as much as 10% of its overall portfolio. 

Clearly, the performance of these funds will have an important impact on the total performance of the pension fund’s private equity portfolio.

Preqin noted that such a large proportion of its portfolio being allocated to funds managed by this relatively small number of general partners reflected its significant appetite for these managers and the influential position these firms occupy in the industry as a whole.

The most recent investment made by CalPERS was in the $2.2bn private equity fund managed by Blackstone this year.

However, pension funds have also taken direct stakes in the firms themselves over the past decade.

Back in 2001, CalPERS bought a 5.5% stake in Carlyle Group and has continued to invest in the funds raised by the company since then.

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