Ever since private equity firms started going public in 2007, much thought has been given to how private equity firms might adapt their fund structures and sources of funding as the public-market tap became available. About a decade after these once controversial offerings, publicly traded PE stocks have underperformed any number of broader indices.
Yet, scant analysis has been done in the way of examining fund-level returns for firms such as Blackstone, Kohlberg Kravis Roberts, Apollo, Carlyle and Oaktree, especially compared to their privately held peers. In this note, we do just that by benchmarking the returns of publicly traded buyout shops relative to the entire PE industry, along with a comparison of the same publicly-held firms relative to their private counterparts of comparable size.
We find that funds of publicly traded PE firms outperform the rest of the industry over the medium and long-term. However, these publicly traded firms underperform their five largest privately held peers, suggesting that LPs would be wise to give preference to larger, privately held firms.