Who's actually the best?
Most rankings on this forum are obsessed with prestige and arguing over if a $12bn latest fund constitutes a megafund (who gives a shit). But I haven't seen an objective ranking on who's driven the best returns, over a sustained period? Anecdotally, Preqin and Pitchbook data can both be spotty, and recent performance can be tough to gauge given lack of exits.
Could we get a ranking going of actual performance, preferably segmented into large cap vs MM vs growth vs etc?
How are you going to account for various quirks like continuation funds, dividend recapitalizations, net asset value loans, SPVs etc? Such a ranking would likely need to be split up into sectors, transactions, exits etc...
Bump. As of today it’s probably GTCR, TA, HIG, New Mountain, KPS in UMM/MM and Warburg unarguably in MF (exits and DPI have been solid asf in the past 2-3 years)
TA's 2021 fund is marked like poop
This, rest is absolutely stellar but next fundraise will be interesting. Rest of the funds on the list are good
The best performing funds are all ones nobody here has ever heard of with $250mm funds doing 3-4x net and 30%+ IRRs. Anything above $3-4b has little chance of actually being the best performing fund in the industry.
Run the carry math on those fund sizes though. 5x a $500M fund and 2x a $3bn fund. Economics make more sense at a $3bn fund. That’s why everyone wants to raise larger funds, not to mention the management fees. Obviously size dependent and your portion of the pie matters.
Sure but odds are at a $500mm firm you have a way larger piece of the pie. 10 people in the carry pool where a 30 year old may have 10-15% of the pool (assuming fund 1-3 here) versus $5b fund you have 1-2% at best. You have 10x the carry allocation with a fund only 1/6 the size, this doesn't even factor in better returns in smaller funds.
From an LP perspective I think GPs generally only raise more $ for management fees (surety of paid) where PE scales pretty easily to that point so the management fee is straight to the owner of the GP (handful of people or maybe even just one person) versus spread across the firm like carry. It's how the founders of large PE firms stay extremely wealthy is the fee revenue to the GP. Recurring fee revenue is literally all public market investors care about on the publicly traded PE firms and you see that in the privately held managers as well.
Asset allocator here. From the point of view as an LP, the below fund strategies have sterling reputations among us and our close peers for sustained performance over several vintages. Also, tech-heavy funds have provided astonishing returns the last decade and a half (FP, Thoma, GTCR, TA Associates), and they’re recognized by LPs for doing so (as reflected in their fundraising), but we also recognize them as the “highest beta” funds in a largely positive macro wave since 2008, and that their performance is largely due to them being able to capitalize on investing in the industry with the highest waves during a time when all boats were being lifted by the tide.
ACP?
Might be Arsenal
Arlington Capital
EVR PFG has this guys number (although he is not wrong at all)
Veritas, HIG, Arlington, and Greenbriar all check out; all have certain areas where they excel and have driven huge returns. Understand that Veritas has diversified out of government and tech services, but those were both central to their reputation as historically elite firms. Think this just highlights genuine sectoral expertise has a strong correlation to returns, and generalist funds tend to do worse.
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Is LGP the leading horse out of this sub-set of outperformers?
Heard Greenbriar is facing performance challenges in its latest Fund VI. Their recent investment in Sparkstone is struggling, given they overpaid significantly, raising the possibility of future markdowns. ACP and Ridgemont confirming great performance in latest funds, Veritas less so but still performing and delivering solid returns
I saw some great slides on exactly this a few months ago when an LP showed this at their AGM, but I can't be bothered to unearth them. I tell you why. The vast majority of folks I know to have made good carry were ones in funds fast to deploy and moved stuff on - not stellar performers (good co-invest opps, perhaps having some interesting DbD side vehicles etc.) Fuggetaboutit.
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This is a popular narrative and the data supports this as well. The median return gets slightly better as you decrease fund size but the top quartile gets much better. Bottom quartile also gets much worse. Much more room for outperformance as you go down market
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