Biggest Doesn’t Mean Best: TPG Named Largest PE Firm

TPG has taken the prize (if it is a prize) of largest private equity firm in the world, as ranked in Private Equity International’s Top 300 list of firms. Carlyle Group, last year’s winner, dropped to number three. GS Capital, Goldman Sachs’ arm, came in second and KKR ranked fourth.

The results were calculated based on capital raised for direct investments in the past five years. Two thirds of the top fifty firms were based in the U.S. TPG won out with $53.6 billion.

It’s ironic that a ranking of this kind would name TPG as number one of anything, given the firm recently earned itself a few other top spots for crappy performance. For our part, peHUB called the firm’s investment in Washington Mutual the worst deal of 2008. Time magazine ranked that deal the 2008’s eighth worst of the year and listed its buyout of Harrah’s, alongside Apollo Management, as the third worst.

As a result, the firm allowed investors to reduce their commitments to its main buyout fund by as much as $2 billion total, and recently, its Asia fund. I wonder if Private Equity International took those potential reductions into account. UPDATE: Our colleagues at Dealzone write that they did.

This list doesn’t serve as any kind of award, it’s merely a mathematical ranking. This year, its almost a scarlet A, as the largest buyout firms struggle to find new ways to invest, manage and mint returns on their money. Notably, the IRRs on the top 50 largest funds performed comparably to the 250 below them. The top 50 saw an average IRR or 13.45%; the lower 250 returned 13.38%, according to Private Equity International.

Read more from Private Equity International