What are the growing MM/UMM firms with defensible strategies (not another JAMMBO) in 2025? I am making a new thread since some of the names in some older threads, like Arcline, seem to be struggling now, so I would love to get some updated names. It doesn't have to be like a firm doubling every fund round, but rather just looking for good MM/UMM names that would be good places to stay in the longer-run.
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Some larger names on the MM space: GTCR, Genstar, and KPS: all good returns and growing at a very solid clip, but not too quickly. Genstar is a good operational player, GTCR has their whole thing with partnering with industry leading managers to acquire their companies, and KPS is KPS; they are maybe the best turnaround guys these days. All 3 of these are decently sweaty, probably at the junior level, but very smart people and great track records.
Would you pick one of the ones listed here or a “lower tier” Megafund
From my opinons as admittedly someone on the banking side experienced wise:
Would say yes if interested in a longer term private investing/PE career; just going to be better to be a junior and climb up the ranks at a place that scales. Even if you want to argue that for a MF you can always go downmarket, unlikely that move is going to be a top growing UMM, and also I think at the junior levels you get a sense of how to invest in a certain invest as well as build institutional goodwill that a lucky enough MF lateral downmarket won't be able to replicate. Also, just less bureaucracy for promotions and more spots opening up at growing private shops vs public MF PE's who at this stage are more of asset aggregators that are focused on increasing AUM through other strategies such as PC over PE. If I were interested in PE, I would target growing MM/UMM firms and try to ride the wave upwards throughout my career, with the caveat that this all depends on risk profile (i.e MFs are always going to be safer).
could you give some color on GTCR
Kingswood Capital
Seconding this one. founding partner is ex-Cerberus / Ares and crushing
Thanks really appreciate the names, think I am looking for things more in line with HIG, Arlington, and One Rock since I'd be incoming as an associate in 2027 and want to go to a firm with a decent bit of runaway for growth by then (assuming these firms all get a fund raise or approaching that by then). Any thoughts on AEA, American Industrial Partners, SK Capital, Greenbriar, and Parthenon Capital? Apologizes if those names aren't relevant, just ChatGPT'd for similar firms that seem large but I haven't heard much about. Would love to get any thoughts on them if possible.
Want to preface my response by saying that the places you listed are all fantastic places to begin your career, and 80% of analysts going through PE recruiting would sign on the spot with any of those firms.
IMO, the MM space has become overly saturated with way too many firms, and as we enter into this new post-ZIRP era of PE, MM PE will consolidate, with winning firms being (1) firms with significant scale or (2) LP-recognized industry specialists.
These days, PE capital has become a commodity, with so much money in the space chasing after the same assets and wringing out any alpha due to extravagant premiums being paid in auctions. As a result, any PE firm that wants to differentiate itself needs a true "proprietary sourcing" angle, which is where scale helps (having a fully built out BD team, lots of touch points and contacts with bankers and industry professionals, multiple strategies to broaden out coverage). Furthermore, as LPs have become increasingly big in the money they manage, they also look for platforms where they can park their money and have it invested in multiple strategies, asset classes, and geographies.
The MM funds that don't have the scale increasingly have to differentiate themselves as "industry experts", as the whole "operational experts" edge has been largely overplayed, with LPs recognizing that most PE firms truly don't have an operational edge and have relied on multiple expansion. Being an "industry expert" doesn't mean your firm needs to actually be true experts (e.g. Patient Square going all the way into the facade and hiring PhDs and scientists), but just that LPs need to be under the impression that your firm is an "industry expert," whether that is due to historical track record in the space, hiring actual industry experts, having a deep network, or through some other way. Over the past 5-10 years, we've increasingly seen JAMMBOs rebrand themselves as industry specialists with an "edge" to curry favor with LPs (e.g. THL's rebrand into tech-enabled services specialists and introduction of an automation fund).
This is a great list and matches my experiences / perception 100%. One interesting MM name I’ll add is Incline Equity. Scaled fairly quickly, has three active strategies (size-based), not afraid to pay big multiples for A+ businesses where they have conviction and an operational angle. Downsides are Pittsburgh HQ (though you could live like an absolute king there) and they did sell a GP stake a couple of years ago which can always be cause to be a little wary, though also provides incentive to grow AUM.
Sixth Street Partners – Growing AUM and making interesting investments across the spectrum of industries. Most recently in the news for a $1Bn stake as part of the new Celtics ownership group, and 10% minority investment into SF Giants. They are some of the most active investors in my industry (non-Tech / Industrials / Sports) specially where they can come in as control investors - different than what they are historically known for. Also have an been growing capital at lights out speed - recently cross $100 Bn in AUM but their main fund (TAO) is a perpetual capital fund that's got ~$25-30 Bn to invest in a sector agnostic manner and are using the Apollo playbook to invest with a lower cost of capital through their insurance arm.
Fair callout, although I'd argue that Sixth Street probably isn't what OP is looking for given that they're a private credit fund that's expanded more into public credit / hybrid credit / special situations. Great growth trajectory, but don't think they can really be comped in MM / UMM buyout universe.
Fair - in my coverage though they have been mostly looking and doing control equity deals but it does get complicated in terms of where to bucket them given they do everything. Kind of similar to Oaktree / Ares in that regard.
Partly why I was listing them though because most of the growth in AUM hasn't been private credit but the equity side of things hence why imo makes sense to list them as a "growing MM/UMM" fund.
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