Private Equity Attracts Range of Investors


Private-equity firms sometimes attract controversy. They also attract something else: interest from a wide variety of institutions.

Investors ranging from pension plans and charities to global insurance companies and university endowments have placed money with private-equity firms.

Public and private pension funds represent 43% of all the money invested with leveraged buyout firms in 2010, the most-recent year tracked by the Private Equity Growth Capital Council. Foundations represented 12% of the money invested.

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What is the appeal? For one, the returns. While stocks have spent the last decade treading water, and bond yields are near all-time lows, private-equity firms on the whole have scored gains for their customers.

Top 10 Investors in Private Equity

Name of Firm Allocation to Private Equity (in millions of dollars)
1. AlpInvest Partners Netherlands 53,786
2. HarbourVest Partners U.S. 34,000
3. Goldman Sachs Private Equity Group U.S. 34,000
4. Credit Suisse Asset Management Switzerland 33,000
5. California Public Employees’ Retirement System (CalPERS) U.S. 32,000
6. Kuwait Investment Authority Kuwait 29,600
7. Credit Suisse Customized Fund Investment Group U.S. 27,707
8. Pathway Capital Management U.S. 26,000
9. Pantheon Ventures UK 25,040
10. CPP Investment Board Canada 24,837

Source: Pregin

As of September 2011, median private-equity returns for large public pension funds over the past five years was 6.63%, according to Wilshire Associates. Median stock-market returns for those funds were a negative 0.86% over that same five-year period.

Another allure: