The 9.4 percent increase in private equity’s assets-under-management to roughly $3 trillion at the end of 2011 - an event that has been reported with fanfare in the media - demonstrates the complexity of the asset class, not it’s recovery from the credit bubble hangover. Breaking the $3 trillion barrier also indicates that the toughest challenges lie ahead for both general partners and limited partners.
First of all, some context. Twenty years ago, some 300 to 400 private equity fund managers, almost all of them investing exclusively in the United States, managed some $30 billion in assets, according to data compiled by Palico. Ten years ago private equity had expanded to some 2,000 fund managers holding $1 trillion in assets, with about 95 percent of that either invested in, or earmarked for, companies in North America and Western Europe. Today, a bit more than 4,500 general partners ply their trade around the globe, overseeing assets three times greater than a decade ago and up 100-fold since 1992.
While the ranks of LPs has grown to between 4,000 and 5,000 over the past twenty years, the size of investor teams has hardly expanded. Some family offices have the same number of people that they did twenty years ago, and though there are exceptions, public pension sector teams have shown relatively little growth.