The 2022 Midmarket HEC Paris – DowJones Private Equity Ranking reveals dominance of North American firms & absence of European ones

No firms from Europe’s largest PE markets, UK & France, made it into the top 20 of the HEC – DowJones 2022 MidMarket Buyout Performance Ranking.

Europe’s leading business school HEC Paris and Dow Jones have released their second annual ranking of the performance of mid-market private equity firms, which has revealed a North American dominance in the top 10. Gridiron Capital, Parthenon Capital, and Great Hill Partners, all from the US, secured the top three positions.

All top 10 firms are based in North America, with eight firms based in the US and the other two based in Canada.

The HEC-DowJones 2022 MidMarket Buyout Performance Ranking, which was compiled by strategy Professor Oliver Gottschalg of HEC Paris, evaluated 99 mid-market firms that had raised between $1bn and $3bn between 2009 and 2018, from a sample of 563 private equity firms with 2,021 funds.

Three European firms managed to make it into the top 20. These firms were Verdane Capital Advisors from Norway, Rivean Capital from the Netherlands, and FSN Capital, which is also based in Norway.

Professor Gottschalg said that the EU top performers are from “peripheral” regions like the Nordics and The Netherlands. He noted that there was no-one from the largest PE markets, specifically the UK and France, in this category.

The 2022 HEC Paris DowJones MidMarket Buyout Performance Ranking

He added: ‘We see that a large variety of strategies in the top 10, from those with a clear tech focus (Great Hill Partners and Acccel KKR) over more traditional PE (consumer, service, industrial) like Gridiron or a de-facto sector agnostic approach like Clairvest for example’.

‘On the top of the list remains Gridiron with a selective approach to industry segments (consumer, B2B and B2C services and niche industries), followed by Parthenon who moved up a rank with a clear focus on service-related industries’.

CBPE Capital from the UK and Egeria from the Netherlands were the only two European firms to make it into the top 20 last year, but both have since dropped out in the 2022 index.

Professor Oliver Gottschalg noted that two of the Top 10 (#3 Great Hill and #3 Accel-KKR) are new to the list of top mid-market PE firms, but were both in fact featured last year as one of the top performers on the large buyout list.

He said: ‘Both GPs had, however, a cumulative fundraising volume for 2009-2018 vintages of less than 3B USD (and less than during the 2008-2017 period we considered last year).

‘Two other new entrants (#4 Clairvest Group and #5 Bertram Capital) are new to the list of top mid-market PE firms, but they both reached for the first time the minimum threshold of having raised over 1B USD over a vintage decade. Both Clairvest out of Toronto Canada and Bertram from the Bay Area of the USA follow a rather diversified industry approach.

‘The last three members of the Top 10 (#8 The Sterling Group, #9 Novacap and #10 Sentinel Capital Partners) were all on last year’s Top 10 as well but dropped a few performance ranks as some of the aforementioned new entrants were able to generate higher returns, while the Cortec Group was had the biggest improvement of those on last year’s Top 20, improving 10 ranks from 17 to #7’.

The 2022 HEC Paris -DowJones MidMarket Buyout Performance Ranking lists the world’s Top PE firms who cumulatively raised between 1-3B USD over a decade in terms of aggregate performance based on all their buyout funds raised between 2009 and 2018.

This ranking answers the question: “Which firm(s) in the MidMarket Buyout segment generated the best performance for their investors over the past years?”

The ranking draws on a comprehensive set of data on PE fund performance sourced from preqin and directly from PE Firms and uses a unique methodology to calculate the aggregate performance of a PE firm based on different performance measures for all the funds managed by this firm. In total, performance data from 563 PE firms and the 2021 funds they raised between 2009 and 2018 with an aggregate equity volume of $1.51 were analysed for the ranking.

The method is able to aggregate performance across vintage years and considers relative and absolute returns.