Every private equity firm likes to brag about its fund performance, to the point that terms like “top quartile” have virtually lost their meanings.  But Oliver Gottschalg, a professor of management strategy at HEC in Paris, isn’t satisfied by knowing which group of firms are the world’s best-performers. He wants to rank them, one-by-one.

Gottschalg and Dow Jones this morning released their latest edition of the PE Performance Ranking Report, which analyzes 112 firms that raised around $726 billion for 726 funds between 1998 and 2007. Here is how Gottschalg explains his rankings:

The aggregate performance score is neither an IRR-type annual return measure nor a money multiple. It can only be interpreted relative to the average aggregate performance score of all firms we analyzed: An aggregate performance score of 1 means that a given PE Firm has an aggregate performance that is one “standard deviation” above the average performance, which would position it typically at the 85th percentile, i.e. 85% of all firms would have a lower aggregate performance. Also, an aggregate performance score of 2 means that performance is twice as high as for an aggregate performance score of 1. A PE Firm with the average performance has (by design) an aggregate performance score of 0.

This year’s top firm was Waterland Private Equity, a Dutch group founded in 1999, which received a score of 2.42. This was a jump from third place in last year’s ranking (when it received a 2.27). Leonard Green & Partners, which has led this ranking for the past two years, fell completely out of the top 20.

Following Waterland were Friedman Fleischer & Lowe (2.32), Platinum Equity (2.10), Hellman & Friedman (1.63) and TPG Capital (1.5). Below is the full report:

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