RIA Compliance and Practice Management Blog

Private Funds: The Growth of Mid-Size and Large Private Equity Funds

Posted by RIA in a Box

May 21, 2019 9:21:55 AM

Total number of SEC-registered exempt reporting advisers and private fund advisers

Our recent analysis of publicly available private fund data, including detailed private equity and hedge fund data, published by the Securities and Exchange Commission ("SEC") revealed that SEC-registered exempt reporting advisers and private funds are perhaps the fastest growing segment of the investment adviser industry. In this follow-up post, we take a closer look at the private equity segment within the broader private fund industry. In particular, by using Form PF filing data, we analyze the relative growth in the number of mid-size and large private equity funds and advisers over the past six years from 2013 to 2018.


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The Growth of Mid-Size vs. Large Private Equity Funds

From 2013 to 2018, the total number of private equity funds advised by SEC-registered RIA firms filing the Form PF has grown at an 8.7% compound annual growth rate ("CAGR"). The private equity fund industry has seen growth both in the mid ($150 million to $2 billion in private equity fund assets) and large ($2 billion or more in private equity fund assets) fund size segments. From 2013 to 2018, the number of PE funds managed by mid-size fund managers has grown at 7.9% CAGR compared to a 10.9% CAGR for large PE fund-managers. However, there are still 2.3x more funds managed by mid-size compared to large fund managers:

Growth of Form PF filing private equity funds data

Source: Publicly available Form PF filing data available on sec.gov as of April 1, 2019. Note: Excludes exempt reporting advisers.

The Growth of Mid-Size vs. Large Private Equity Fund Advisers

From 2013 to 2018, the total number of SEC-registered RIA firms filing the Form PF that advise private equity funds has grown at a 5.9% CAGR. There has been growth both in mid-size advisers ($150 million to $2 billion in total private equity fund assets under management) and large-size advisers ($2 billion or more in total private equity fund assets under management). From 2013 to 2018, the number of mid-size PE fund-advisers has grown at 4.8% CAGR compared to a 9.4% CAGR for large PE fund-advisers. However, there are still 2.9x more mid-sized than large-sized PE fund-advisers:

Growth in the number of private equity fund advisers data

Source: Publicly available Form PF filing data available on sec.gov as of April 1, 2019. Note: Excludes exempt reporting advisers.

Private Equity Fund Advisers are Managing More Funds Over Time

As the chart shows below, from 2013 to 2018, the average number of underlying private equity funds managed by each SEC-registered RIA firm filing the Form PF that advises one or more private equity funds has grown at a 2.7% CAGR:

Private equity firms are managing more funds on average

Source: Publicly available Form PF filing data available on sec.gov as of April 1, 2019. Note: Excludes exempt reporting advisers.

Thus, while the private equity industry is seeing an overall increase in the total number of private equity firms, the data also shows that much of the growth of new underlying private equity funds can also be attributed to existing private equity firms that continue to expand their size and breadth. 

Be sure to check back soon as we continue to provide additional analysis on the private fund industry including a deeper dive on hedge fund filing data.

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Topics: RIA Operations, RIA Compliance

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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