Listed Private Equity Firms Are More Aggressive, Data Show

Blackstone, Apollo, Carlyle, and KKR are hungrier for assets than their unlisted peers — or simply better at getting them.

Illustration by II

Illustration by II

Publicly traded private equity firms are raising capital more aggressively than their private peers, new research from PitchBook showed.

The four largest publicly traded firms — Apollo Global Management, Blackstone Group, Carlyle Group, and KKR — are launching new products and targeting larger flagship funds to gather as much capital as they can, the data firm found.

Giant listed firms see themselves as “perpetually undervalued,” the report said. Shareholders and analysts broadly misunderstand the variable cash flows that are innate to private equity, as the argument goes. In the hopes of pleasing shareholders, firms are aggressive in increasing fund sizes to boost management fees and potential performance fees or carried interest, according to PitchBook.

General partners “are incentivized to garner inordinate sums of capital, thereby growing the fee base,” the report said. “Management fees, unlike carry, are recurring and predictable, which public investors value more highly.”

PitchBook compared the four largest publicly traded firms with four private peers: Advent International, Bain Capital, TPG Capital, and Warburg Pincus.

The average flagship fund size for these listed firms was $18.9 billion between 2015 and 2018, while unlisted companies’ vehicles averaged $11.6 billion during that period.


Public firms also grow their coffers by expanding product ranges, the report showed. Between 1997 and 2000 — before any of the four had gone public — they closed an average of 2.5 unique strategy offerings each, versus 1.5 for Advent, Bain, TPG, and Warburg Pincus.

That gap swelled impressively after Apollo, Blackstone, Carlyle, and KKR went public. During the 2015 to 2018 period, they averaged eight distinct strategy closures, while the unlisted group only edged up to 2.3. “The growth in strategy offerings and fund closings shows the public cohort’s desire to diversify the business and grow assets under management and accompanying management fees, while the private cohort has stayed leaner and more focused,” according to PitchBook.

[II Deep Dive: Blackstone Posts Big Private Equity Gains]

Performance over the long term was similar for listed and private funds, the research found. Publicly traded private equity companies tended to perform better when measured on internal rates of return, while private shops won out via total-value-paid-in, another measure of performance. This may mean that publicly traded private equity firms can generate returns more quickly, whereas private firms do better with more time.

“The pressures of being a public company with outside investors do not seem to affect fund performance negatively,” the report said. “Relative performance is consistent before and after these firms listed publicly.”