PE Ranking - Europe
Think it would be useful to have a ranking for PE Funds with a significant presence in Europe according to Prestige, Selectivity, Performance & Ticket size. Will adjust the list based on feedback.
Tier 1.5/MFs: BX, EQT, CD&R, Permira (although have heard recent performance was comparatively weak - can someone comment?)
Tier 2: Cinven, Bain Cap, Warburg Pincus, Apax, General Atlantic (although mainly GE?), Silver Lake, Apollo (what about European presence?), H&F
Tier 3: PAI, Ardian, Partners Group, Apax (also GE), HG Capital, TPG, Carlyle, Nordic Capital, TA
Tier 4/MM: Bridgepoint, 3i, Triton (big in Germany)
Adjustments: CVC up to T1, BX down to T2, Carlyle to T3, added CD&R in Tier 1.5, added H&F in T2, added Nordic in T3, added TA in T3
You are basing this ranking off of perceived “prestige and selectivity only”
Unfortunately, perceived prestige doesn't pay you carry
ranking is so wrong for the actual good funds in Europe - lots of in-depth posts were made so use the search bar
Bx at tier 1 is laughable with their extremely weak track record in Europe. KKR raised for 2 years and fell really short of hard cap. Lots of US funds like TPG don't even deserve to be on this list because they are shit in Europe but are banking on their US name for clout.
Cvc performance for their size is killer - they are eu focused and are raising the largest buyout fund ever and you have them at tier 1.5?
Where is Cd&r? Why is HG tier 3? Why is Carlyle tier 2?
You have to be honest with how you are ranking these funds. If you want “prestige”, fine go for this ranking though I’d still argue going to the funds with best performance gives you more clout than going to a mediocre fund with a big brand name from the good old days.
Rankings based off of actual performance. You can extrapolate perceived “prestige” by comparing these to their fund size. I cba to make more tiers hence why everyone is lumped into the end is bad or very mediocre:
Tier 1: CVC, EQT, Advent, CD&R
Tier 1.5: Waterland (due to fund size), HG, Permira
Tier 2: HIG
Tier 2 (Good performance, but too US centric): Silver Lake, H&F (could move to bottom tier after recent performance - might blow up soon)
Pretty much splitting hairs after this point - just take the biggest name as performance is all around bad/mediocre at best
Tier 2.5 and below: Cinven, KKR Europe, BX, Bain Capital Europe, Apax, Carlyle, TPG, Astorg, Apollo, Triton, Bridgepoint, 3i, PAI, Ardian, Partners Group, Warburg Pincus, IK
Agreed. Many of the US funds are not doing very well in Europe. I've also heard about several cases where deals are run from the US and the London office is just a support function. That will seriously impact the learning experience and skills you develop.
I've been in 2 American REPE mega funds based in London. Both with a lot of prestige but really low performance as pointed above. I can also confirm that all decisions were taken from the US and key roles in the London office were held by Americans. You need locals to handle your investments, especially if you're going balls deep in RE located in Southern Europe. The disconnect between decision takers and underlying assets is so huge that carry discussions are not even on the horizon. The European offices are surviving solely on management fees.
My new motto around other students will be "Unfortunately, perceived prestige doesn't pay you carry"
You made some valid points on why the original list was incorrect, but then you make an almost equally ridiculous list.
Truth is it is impossible to make an accurate list. What people should really consider is "where would I have the best career", which is optimizing for pay / career trajectory / recent fund performance (because it relates to you career and pay trajectory) / size & prestige (if you care about that, but reasonable to factor in due to how it impacts your exit optionality) / WLB & culture (but usually too subjective to really include for a ranking).
You may disagree on these metrics, but some rather questionable tiering here if you consider the full picture.
Sure, the full picture is important including culture and headcount saturation, but performance is the most important metric out there. When you take fund size into account, the tier 1 to tier 2 funds in Europe are the best, no two ways about it.
Ranking can be adjusted for some of the other points you raised, but at the end of the day, if you are grinding to reach the top, you'll look at performance and headcount saturation and won't care for anything else. Your career will be equally as miserable at any of these funds anyway while grinding to the top. if you just want to adjust for a "good career" which is very subjective, then that's a very different story and would agree that a lot of the other points matter.
Ranking based on exits in Europe is pointless - this isn't the US where people do 2+2 and then an MBA or go to a cub. the expectation is that everyone getting into PE is gonna stay within private markets. Jumping from PE to HF isn't that common (most folks get into HFs from sell-side ER and banking).
Thanks for the in-depth - albeit slightly condescending - answer.
A couple of points to note:
a) When looking at junior levels I'm not sure how vital carry really is - perhaps it's better to maximize learning experience/exposure. I know that some funds such as CVC are known for aggressive "eat-what-you-kill"-compensation, but maybe someone can shed some light on other compensation schemes & the other funds on this list.
b) KKR & BX still manage to attract some pretty impressive talent - there must be at least some reason as to why they are able to do so even though their performance lacks behind other funds such as Waterland.
I agree entirely that prestige is not the only metric and probably also not the main metric that should influence future career decisions but I do think that it is a reasonable factor to consider when choosing between different offers and funds.
From another comment I posted on a different thread:
Fund performance - has not been as good as others. But, not 'awful' either. Latest I have (31/12/21) are: Fund V (2012): TVPI 1.6x / DPI of 1.6x, Fund VI (2016): DPI 1.1x / TVPI 1.8x, Fund VII (2020): DPI 0.0x / TVPI 1.2x
Also fundraising performance has reflected this.
Would echo the above - Many of the very large deals (like Thysen Krupps or LSI) are partnerships with Advent/Bain in the driver seat with Cinven tagging along (seen as less involved in value creation etc.) and recent returns are not great.
Cinven is a fund past its prime based on trajectory and returns and would agree on putting them in the "Tier 2.5 below" bucket
Culture used to be good but has gone down hill a lot in recent years (some teams still have good culture like the Healthcare team, but some teams appear to be very toxic).
Upwards mobility used to be good, but with slowing growth several teams have become very crowded and there has been quite some firing on the mid levels, which makes many people nervous.
Despite people trying hard to come across as friendly, overall culture is said to be highly political and severely lacking in terms of transparency