Listed private-equity stocks have outperformed the FTSE Global All Cap Index in the past decade, returning 350% to shareholders, versus 220%, according to alternatives research and index provider LPX AG. This is making them increasingly attractive to retail investors.
The top 10 listed private-equity firms in the LPX50 index, which measures global performance among the most liquid firms in the LPX Index series over the past year, were US-headquartered firms Ares Management and The Blackstone Group (NYSE:BX), and London-based Oakley Capital Investments (AIM:OCI) and HgCapital Trust (LSE:HGT).
These top-performing firms returned 33%, 32%, 18% and 17% to shareholders, respectively, LPX said.
Private equity has returned 64% to shareholders in the public markets over the past two years and more than 82% on a five-year basis, the research firm said. By comparison, the FTSE Global All Cap Index returned just 38% over two years and 63% over five years.
The total market capitalisation of listed private equity has grown five-fold over the past decade, LPX AG estimates, putting the total market cap of liquid listed private equity at €332.17bn at the end of May.
Total assets managed by listed fund managers have ballooned to €2trn by the end of 2021, up from €290bn just over a decade ago in 2010, as firms seek to put large institutional fund commitments to work.
Listed private equity’s performance rose 6% based on net asset value, according to the LPX50 NAV Index, amid a shift in allocations away from exposure to financials but increasing exposure to IT. The discount on private-equity stocks is currently 22%, LPX50 said.
Dr Michel Degosciu, co-founder and managing director of LPX AG, said: “Private equity has experienced strong growth over the past few years, reflecting an increased investor appetite for alternative investments.
“Current valuation levels continue to offer attractive investment opportunities in private equity, making it an increasingly valuable asset class to monitor in a periodic and systematic way.”
LPX has launched a new Listed Private Equity Barometer to provide data on global listed private equity stocks.