Private equity firms have been going public and becoming publicly traded companies in recent years. In this article, we’ll explore the reasons why, what it means for them, and which firms have made the switch. We’ll also talk about why some funds have chosen to stay private.
Why Go Public?
Most people would assume that private equity firms are… well… private, given the name. But, there are actually quite a few publicly traded private equity firms out there.
There are a couple of reasons why a private equity firm would decide to go public:
- It awards general partners at the firm the opportunity to get liquidity on their ownership stake in the firm
- Listing on stock exchanges provides private equity firms with greater liquidity, as anyone can invest in them.
- After going public, private equity firms have the financial backing to expand into offering other financial services, such as hedge funds, credit funds, growth equity, venture capital, and sovereign wealth funds.
So, as you can see, there are several benefits for private funds to go public, for both the fund and the partners.
What Does It Mean For a Private Equity Firm To Go Public?
Going public means that a private equity firm is listed on stock exchanges, and anyone can buy shares in the company.
Note, however, this is a big difference from investing in private equity funds, where the capital raised is used to buy portfolio companies.
When a private equity firm goes through an Initial Public Offering (IPO), the capital raised can be used for pretty much any corporate purpose – it is not limited to just investing in other companies.
For instance, the funds can be used to:
- Repay company debts
- Fund growth initiatives – like new products, funds, or services
- Create liquidity for senior partners at the firm
Which Private Equity Firms Are Publicly Traded?
I’ve already mentioned above that there are actually quite a few firms in the private equity industry that are publicly traded. Below, I have made a list of the best and most well-known publicly traded private equity firms.
The Blackstone Group Inc. (BX)
The Blackstone Group Inc. is one of the biggest names in the industry. It was founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. It remained private for many years, however, it went public on June 21, 2007, through an IPO.
The IPO was a resounding success, with Blackstone Group being able to raise $4.13 billion through the sale of a 12.3% stake in the company.
It is actually the largest IPO to date in the US, since 2002, which makes a lot of sense – Blackstone is one of the largest firms in the private equity industry.
Apollo Global Management (APO)
Apollo Global Management arrived on the scene in 1990 after being founded by Marc Rowan, Leon Black, and Josh Harris.
There were plans to go public for quite some time before it eventually happened, with Apollo filing with the US Securities and Exchange Commission in preparation for an IPO.
The firm finally went public on March 29, 2011, and managed to raise $565.4 million by offering a 15% stake in the company.
One of the most well-known and notable companies that Apollo invested in was ADT Incorporated. ADT – a home and business security provider – is the largest transaction of Apollo to date, costing $6.9 billion.
KKR & Co. Inc. (KKR)
KKR & Co. Inc was founded by Henry Kravis, Jerome Kohlberg Jr,., and George R. Roberts back in 1976. The founder’s surnames serve as the name of the company, but we often shorten it to KKR.
KKR went public in July 2010, after trading privately for many years.
It is interesting to note that the three founders and existing shareholders actually sold some of their stakes and managed to raise $1.25 billion in the process.
When KKR and a few others acquired TXU in 2007 for $44.37 billion it was, and to this date remains, one of the largest private equity investments ever.
TPG Inc., formally called TPG Capital when it came out in 1992, was founded by David Bonderman, James Coulter, and William S. Price III.
A well-known name in the industry, TPG Inc. is famous for acquiring stakes in Uber and the global music streaming platform Spotify.
TPG only went public on January 13, 2022, and managed to raise $9.1 billion through its IPO. It sold shares for $29.50 apiece.
The Carlyle Group Inc. (CG)
The Carlyle Group Inc. was founded in 1987 by five founders: William E. Conway Jr., Stephen L. Norris, David Rubenstein, Daniel A. D’Aniello, and Greg Rosenbaum.
In 2015, Carlyle was once considered the world’s largest private equity company, but dropped down to second place in 2020.
Like many of the other private equity companies on my list, Carlyle bit the bullet and went public on May 3, 2012. It completed an IPO and managed to raise $700 million in the process.
EQT – EQT A.B. (EQT.ST)
EQT is a Swedish private equity firm that first hit the market in 1994. Interestingly, this firm was founded by four different entities:
- SEB Asset Management
- AEA Investors LP
- Investor AB
- Conni Jonsson
EQT has offices across the globe, but most of them are found in Europe.
In September 2019, EQT’s private investors made a big decision and decided to take the company public. They achieved this by holding an IPO where some new shares were issued, and some shareholders sold their existing shares.
This allowed EQT to raise an incredible $890 million through its IPO.
Ares Management is one of the newer kids on the block (in relative terms), as they were only established in 1997.
The co-founders for this company were:
- Antony Ressler
- Bennett Rosenthal
- John H. Kissick
- Michael Arougheti
- David Kaplan
Ares Management didn’t wait as long as some other firms to go public. The firm’s IPO took place in May 2014, and it managed to raise $216 million by selling 11.1 million shares at a price of $19 per share.
Oaktree Capital was founded in 1995 by Howard S. Marks and Bruce Karsh who used to work together at the private equity firm TCW Group.
It started off as a private equity firm (and therefore I’m including it here), but today it is best known as one of the biggest distressed debt investors in the world.
The company has an impressive list of clients; including more than 400 corporations and their pension funds.
Oaktree Capital went public in 2012 via an IPO. It managed to raise $380 million by selling 8.84 million shares in the company, at a costly $43 per share.
In 2019, Oaktree Capital became a subsidiary of Brookfield Asset Management. It was acquired for $4.7 billion for a 62% stake in the company.
Icahn Enterprises L.P. (IEP)
Icahn Enterprises was founded by a billionaire investor called Carl Icahn on February 17, 1987. The company went public incredibly early on, as its IPO took place in 1990, and it went on to raise $157.5 million by selling shares at $12.50 apiece.
Icahn is known for its activist investing approach, as it regularly acquires underperforming companies to try and turn them around.
Man Group (EMG.L)
Man Group is a very old company, it was founded in 1783 as a sugar cooperage and brokerage by James Mann.
It only became involved in private equity in 1987. Still, Man Group went public soon after in 1994, and its IPO was able to raise $378 million by offering 30% of its shares to the public.
Other Large Private Equity Firms That Are NOT Publicly Traded
While many private equity firms have taken the leap and gone public, there are still many other large firms that remain private companies.
CVC Capital Partners
CVC Capital Partners was founded in 1981. Back then it served as the European arm of Citicorp Venture Capital, but it became independent in 1993 after management completed a buyout.
CVC has offices across the globe, but the headquarters are situated in Luxembourg.
The firm is widely successful, having invested in more than 100 companies. Today it is regarded as one of the top private equity firms because of the impressive amount of successful investments.
Thoma Bravo LP is a relatively new firm, founded in 2003. It is the successor to Golder Thoma & Co. a firm that was established in 1980.
Thoma Bravo is managed by Seth Botro, Orlando Bravo, Scott Crabill, Lee Mitchel, Holden Spaht and Carl Thoma at the time of writing.
Today the company is mainly involved in the technology private equity industry, acquiring software companies. In 2021, it was considered to be the fastest-growing major buyout firm in the whole world.
Vista Equity was established in 2000 by Robert F. Smith, who currently serves as the chairman and CEO of the firm.
Just like Thoma Bravo above, Vista Equity also predominantly invests in software companies. Some notable brands that the firm has acquired include Marketo, Ping Identity, and Workiva.
Warburg Pincus is a well-established name and one of the older private equity companies on the block.
It was established by Lionel Pincus and John M. Erburg Jr. in 1966.
To date, Warburg Pincus has successfully invested in 1,000 companies in more than 40 countries – a truly astounding number if you ask me.
Thus far they have invested in companies in a range of industries, including the healthcare, technology, financial services, energy, and consumer products sectors.
Neuberger Berman is a unique company with a rather fascinating history. It was founded back in 1939, and what really sets it apart from other firms is that it is 100% owned by its employees.
One of the major milestones of Neuberger Berman was when it acquired Lehman Brother’s investment management business in 2008 for $2.15 billion.
Can you buy stocks in any private equity firm?
No, you are not able to purchase stocks in most private equity firms since they are private companies. You will only be able to purchase shares if the private firm is listed on public stock exchanges, such as the ones discussed above.
Why do companies sell to private equity firms?
Many companies sell to private equity companies because they often give them the capital and support they need to grow. It also removes the public scrutiny and reporting requirements, allowing the company to take a long-term approach at bettering the company.
In conclusion, the decision of private equity firms to go public and become publicly traded companies is a recent trend that has gained traction. While private equity firms and their investors have traditionally been exclusive and private, going public can provide significant benefits.
We’ve looked at why private equity firms might decide to go public, what that entails, and which firms have already done so. We’ve also talked about some of the largest private equity funds that have chosen to remain private.
Understanding these trends allows you to gain a better understanding of the changing landscape of private equity investments and how they may affect the broader financial industry.