CHICAGO, IL -- Agamya Capital conducted an extensive study of current investments of private equity firms in the US, with a primary focus on buyouts and recapitalizations. The study began with a review of over 2,000 private equity firms and was narrowed to nearly 1,000 firms with private equity investments in the US.
The study found a remarkable consistency in investing by sector for the top sectors in pre- as well as post-2009 era of private equity investing[1] (see Figure 1&2). For example, consumer and food sectors comprise nearly 20% of all current portfolio companies, and the same holds true when analyzing only pre-2009 investments. The same is true for Industrials (11%) and Healthcare (12%) (see Figure 1).
However, investing in some of the cyclical sectors mirrored economic activity (see Figure 3). For example, 75% of the current portfolio companies in the Mining sector are pre-2010 investments, which is highly correlated to the pullback in the Mining sector globally as a result of slowing economic growth in China. On the other hand, the current inventory distribution – by investment year – of investments in food companies and packaging companies are near mirror images, validating the high level of interdependence between those two sectors.
Additionally 34% of funds have not raised new capital since 2010 (see Figure 4). The study found a strong correlation between the percentage of current portfolio that is pre-2009 and the success in raising new capital since 2010 (see Figure 5). For example, most funds that raised capital in 2013 and 2014 (as of August-2014) have less than 60% of their current portfolio in pre-2009 investments.
40% of the funds that raised new capital since 2010 have 4 or more active investments that were made pre-2009. Among such funds, the median workload (measured by latest fund size divided by number of senior professionals at the firm) is $220M for Mega Funds (fund size >$1B), $96M for Large Funds (>$500M-$1B), and $53M for Mid-market Funds ($150M-$500M).
“The study has helped us construct a data driven and nuanced understanding of investing and exit cycles," said Praful Mittal, President of Agamya Capital. "History, if known accurately, can be one of the greatest teachers."
[1] Current portfolio inventory, which includes past investments, was used as proxy for total investing in that year
About Agamya Capital
Agamya Capital invests patient and flexible capital in privately held companies and helps management teams overcome resource and capital constraints. We also apply our deep operating and consulting expertise to help companies identify and implement actionable strategies to drive significant growth and operational improvements.
Our capital is family office permanent capital, which gives us unique flexibility and access to substantial resources. Our approach is driven by disciplined investment thesis combined with deep industry insights.
For more information, please contact Will Rosler at wrosler@agamyacapital.com or at 312-277-0116
[1] Current portfolio inventory, which includes past investments, was used as proxy for total investing in that year
About Agamya Capital
Agamya Capital invests patient and flexible capital in privately held companies and helps management teams overcome resource and capital constraints. We also apply our deep operating and consulting expertise to help companies identify and implement actionable strategies to drive significant growth and operational improvements.
Our capital is family office permanent capital, which gives us unique flexibility and access to substantial resources. Our approach is driven by disciplined investment thesis combined with deep industry insights.
For more information, please contact Will Rosler at wrosler@agamyacapital.com or at 312-277-0116