Private equity firms get ranked in all sorts of ways. The amount of capital under management. The number of deals done in a given year. The number of companies taken public or, conversely, the number of portfolio company bankruptcies.
But, in the end, only one ranking really matters: Who has the best performance?
And it seems that there is an answer, despite the private equity industry’s typical reluctance to discuss its returns.
Oliver Gottschlag, a professor of management strategy at HEC in Paris, recently teamed up with Dow Jones to determine the best-performing private equity firm of the past 10 years. They only included firms that had raised at least two funds during the period, with aggregate capital exceeding $500 million. In addition, they only included firms for which they could obtain performance data — most of which came from industry research firm Preqin, which solicits such information from public-sector investors (pension funds, etc.) and some of its own private clients.
All in, that gave Gottschlag 98 firms that raised 273 funds during the period, representing $411 billion in total equity. And the winner was…
Leonard Green & Partners, the Los Angeles-based firm currently in the hunt for such companies as J. Crew JCG , BJ’s Wholesale Club BJ and The Palms Casino Resort. Gottschlag does not disclose Leonard Green’s specific performance data — likely due to a non-disclosure agreement with Preqin — but does give it an aggregate performance score of 3.33. For context, the 10th firm on the list, AXA Private Equity, received a score of 1.08.
Here is Gottschlag’s explanation of the scores:
Here is the full top 20 (yes, there does seem to be some European bias, save for Leonard Green nabbing the top spot):
- Leonard Green & Partners (3.33)
- Astorg Partners (3.0)
- Waterland Private Equity (2.27)
- Hellman & Friedman (2.11)
- Lincolnshire Management (2.02)
- Nordic Capital (1.68)
- BC Partners (1.25)
- Permira (1.17)
- TowerBrook Capital Partners (1.16)
- AXA Private Equity (1.08)
- Friedman Fleischer & Lowe (1.07)
- Sterling Group (1.0)
- Barclays Private Equity (0.86)
- Onex Corp. (0.85)
- Gilde Buy Out Partners (0.85)
- LGV (0.85)
- Altor Equity Partners (0.81)
- Blum Capital Partners (0.79)
- Berkshire Partners (0.77)
- Charlesbank Capital Partners (0.76)