Goldman’s ‘silent giant’ is world’s largest PE firm

Goldman Sachs Principal Investment Area is the largest private equity firm in the world, according to the PEI 300, Private Equity International magazine’s proprietary ranking of private equity direct-investment programmes.

The publicity-shy private equity division of the banking giant has raised $54.5 billion for private equity direct investment over the past five years, including the $20.3 billion GS Capital Partners VI raised in 2007. Goldman’s Principal Investment Area has raised a mammoth $13 billion mezzanine debt fund, an investment strategy that is included in the PEI 300 methodology.

Goldman ranked second in last year’s PEI 300.

In this year’s number-two spot is The Carlyle Group, which has raised $47.8 billion over the past five years for a wide range of private equity strategies.

Rounding out the top five are Kohlberg Kravis Roberts with $47 billion, TPG with $45.1 billion and Apollo Global Management with $34.7 billion.

CVC Capital Partners is the sixth largest private equity firm and the largest firm based outside of the US. The London-based firm raised $34.2 billion over the past five years.

The largest firm headquartered in Asia is Beijing-based CDH Investments, with $4.1 billion in capital raised over the past five years.

A complete list of the top 300 firms can be viewed here.

The PEI 300 are explored in detail in the May issue of Private Equity International magazine. The article, accessible to Private Equity International subscribers, may be viewed here.

Last year’s number-one firm, TPG, fell in the rankings in part because it slashed the size of a key private equity fund, TPG Financial Partners, to $2.5 billion from $6 billion. The firm told investors the size of the financial services investment opportunity had been diminished by factors including government intervention.

The 300 firms in this year’s ranking have raised a total of $1.315 trillion over the past five years. This is a step down from the $1.337 trillion raised by the largest 300 firms over a similar time span ending 15 April 2009. As the PEI 300 moves forward for the next several years, this five-year fundraising total will likely shrink further as the fundraising boom years peaking in 2007 are removed from the ranking method and replaced by the much weaker fundraising years following the 2008 economic crisis.

The PEI 300, now in its fourth year, is the only apples-to-apples ranking of private equity firms by size. It ranks firms by the amount of direct-investment private equity capital raised or formed over an approximately five-year window. The rankings do not include funds of funds, property funds, hedge funds or most forms of debt funds. Strategies included in the methodology are buyouts, growth equity, venture capital, control-oriented distressed investing and mezzanine debt. The methodology also includes limited partner co-investment capital as well as publicly traded pools of capital. Details of the PEI 300 methodology are available in the May issue of Private Equity International.