Since 2009, Professor Oliver Gottschalg of Paris-based HEC Business School, also known as école des Hautes Etudes Commerciales de Paris, has put out an annual ranking on top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking illustrates private equity firms’ historic performance and expected “future competitiveness” based on a number of criteria. The rankings help denote which private equity investors generate top performance over a period of years.
Gottschalg’s in-depth methodology calculates the aggregate performance of a private equity firm based on a suite of measures which include: distribution to paid-in capital, total value to paid-in capital and a fund’s internal rate of return (IRR). Some of the statistically significant factors possessed by top-quartile private equity firms are firms that focus on fewer industries and not heavily diversified. Another factor are private equity firms that are great at timing the public markets (knowing when to buy and sell).
Gottschalg’s study assembles data on 329 private equity firms and 558 funds raised from 2001 to 2010, with an aggregate volume of US$ 1.014 trillion. DJX Dow Jones provided the database to conduct the study.
Making the top 10 includes, Texas-based buyout shop Vista Equity Partners at #1. Vista Equity Partners was founded by Robert Smith and Brian Sheth back in 2000. The former Goldman Sachs technology bankers have amassed a veteran team of private equity executives, allocating capital to investments like Misys, Lanyon, Tibco and Autotask. Vista Equity Fund III generated a net IRR of 29.8% as of June 2014. Vista Equity Partners came in second in 2013.
Coming in at #2 is Netherlands-based Waterland Private Equity Investments B.V. whose investment portfolio has notable firms such as Perrigo Company plc and FleetPro. The number #3 spot goes to Tom Gores’ Platinum Equity, LLC which was founded in 1995. Portfolio companies include: MegaPath, Ryerson, Quark, Terratest and Transworld Systems.
The listed score is a relative to the average aggregate performance score of all firms analyzed in the sample.
Top 15 – 2014 HEC-DowJones Private Equity Performance Ranking
|Rank||Private Equity Firm||Performance Score|
|1||Vista Equity Partners||1.57|
|2||Waterland Private Equity Investments B.V.||1.36|
|4||Odyssey Investment Partners||1.07|
|6||ABRY Partners LLC||0.97|
|7||Clayton Dubilier & Rice||0.97|
|10||Sun Capital Partners Inc.||0.88|
|11||Baring Private Equity Asia||0.86|
|12||Varde Partners Inc.||0.85|
|13||Apollo Investment Corporation||0.84|
|14||BLUM Capital Partners||0.78|
|15||Ares Capital Corporation||0.76|
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