What is a Megafund?
People on this forum seem to frequently double down on “knowing” MF PE is what they want their future role to be. However, I have a pretty simple question for the forum that no one seems to be able to answer:
What firms are megafunds? Why?
Do you go by AUM? Investing Strategy?
In my banking career years ago, my middle market bank frequently engaged with clear mega fund names ranging from KKR to blackstone, seems fishy. Insight has raised more capital than Clearlake, Warburg, Bain, or LGP, but it’s viewed as a growth/VC shop from a quick google search and this forum’s opinion.
Let’s agree as a forum on a real way of delineating between MM funds, UMM, and mega funds. The reality is today many shops have various strategies in different ends of the market making recruiting a different game than it used to be. Further, going by AUM seems to be the leading method, but definitions and beliefs on this forum are so out of whack today people need a reality check.
So I propose, state your methodology and create a list, so the forum can know what is elite and what fails to make the cut.
I see MFs as a one stop shop solution that offer LPs a “global” platform to allocate “big $ checks” across AA rated type liquid paper all the way to illiquid PE.. in other words returns ranging from 6-7% to 20+%.
If you think about this.. most traditional MFs (or atleast what 90% of this forum consider as MF) fits the bill offering global exposure across credit(liquid, spec fin, asset backed, & illiquid), CLOs, venture, growth, life sciences, secondaries (maybe), energy, infra(debt & equity), RE(debt & equity), PE, Special Sits..
Doesn't make CD&R, Berkshire, HPS, Oaktree, Insight, any less interesting and they are great at what they do best..
IMO its crazy to not consider H&F, CD&R, Advent etc to be a MF
Would even consider H&F to be more of a MF than Bain, WP, etc.
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I actually thought M&I did a good summary:
https://mergersandinquisitions.com/private-equity-mega-funds/
I hate that anyone cares / that I’m even responding but I can’t help myself…
I agree that the term MF implies a level of full service offerings (real estate, credit, growth, etc) beyond PE, international presence, and obviously a large flagship PE fund that can do massive deals around the world. As someone else mentioned, it’s somewhere an LP anywhere in the world can park $1b+ and choose an offering that fits their needs.
By this definition, places like H&F don’t qualify, even though they’re an arguably bigger / better player than many in the above list. There’s also some large international funds that probably check the above boxes but maybe aren’t quite relevant enough to count here (for example, EQT) or maybe there’s just a separate list of non-US players.
I’d compare it to bank rankings - no one is saying that DB is better than Evercore because DB is a BB, but DB is just a BB because of their balance sheet, diverse revenues, global footprint, etc.
Just the same, Bain is a more global player with more diverse offerings than H&F, but that doesn’t mean its a better PE firm, and certainly not that it’s a better spot to be an associate.
I think the issue is people on here go MF -> UMM -> MM. I’d argue there needs to be another bucket of like “large cap PE” for funds like H&F, CDR, etc that aren’t really MFs by that definition but are by no means UMM a players either.
That said this is all meaningless - join a fund you like and that does well and don’t worry how anonymous people on the internet sort it
A good rule of thumb -> does their latest fund pass the $10bn mark? If yes -> they are a MF.
Was thinking about this today for other reasons but since someone asked, in my (intern) mind
i. Traditional MF's that are large asset managers with full service offerings and large PE Flagship Funds (BX, Apollo, Carlyle, KKR, TPG)
ii. PE Fund with latest Flagship Fund/current fundraise target is $18bn or more (H&F, Thoma Bravo, Silver Lake, Warburg Pincus, Vista Equity, CD&R)
Hmm, I always thought MF stood for MotherFucker ....
Interestingly, the MF label is much less used in London where the main label is just large cap PE which will be more indicative of both the experience you will get and the perceived quality of the platform.
how come less used in Ldn?
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