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HEC - Dow Jones - PE Fitness Rankings - FAQ_final

HEC - Dow Jones - PE Fitness Rankings - FAQ_final

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Published by Dan Primack

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Published by: Dan Primack on Jan 13, 2011
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01/13/2011

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Proprietary and Confidential All Rights Reserved © Prof. Oliver Gottschalg
The HEC - Dow Jones Private Equity Fitness Ranking 2010
TM
 Executive SummaryFrequently Asked QuestionsWhat is new/interesting about the “HEC - Dow Jones Private Equity Fitness Rankings
TM
”?
The Private Equity (PE) industry is notoriously opaque and access to any data is chronicallydifficult. In particular, little is known about the performance and competitive positioning of thekey PE firms. While rankings exists for many other areas (the best “business school”, the best“place to work”, the best “stock market analyst” etc), nothing comparable existed in PE until veryrecently. The only existing “rankings” were merely lists established by different trade journalsand based on some single measure of scale and thus had has relatively limited meaning.In November 2009, HEC School of Management and DowJones published the first-ever PrivateEquity Performance Ranking
TM
of global PE firms in the
Wall Street Journal, Financial News
 and
 Private Equity News.
The Private Equity Performance Ranking
TM
uses an innovativeaggregated measure of past performance to identify and rank the top 10 GPs worldwide. Now we are ready to present the second, complementary ranking that analyzes the world’sleading PE firms in terms of their “competitive fitness”.
Simply speaking, what does “competitive fitness” mean?
The HEC - Dow Jones Private Equity Fitness Ranking answers the question: Which firms are best positioned to generate strong long-term performance going forward? It evaluates each firm’scompetitive positioning based on 10 different empirically validated criteria and then derives anoverall future competitiveness score based on the historic link between firm performance andeach of these criteria. Collectively, these criteria capture some of the most relevant drivers of value creation, including scale, quality of deal flow, ability to time debt and equity markets, andstrategic positioning.
 
 
Proprietary and Confidential All Rights Reserved © Prof. Oliver Gottschalg
 
RankFirm NameFitnessScore(Standar dized)1AXA Private Equity 3,10
2CDC Entreprises Equity Capital (IXIS Equity Cap/Priv Equity) 3,073Providence Equity Partners, Inc. (FKA: Providence Ventures) 2,684Goldman, Sachs & Co. 2,465TPG (FKA:Texas Pacific Group) 2,446Oak Hill Capital Management, Inc. 2,407Norwest Equity Partners 2,338Madison Dearborn Partners LLC 2,149Carlyle Group, The 2,1110Welsh, Carson, Anderson & Stowe 2,00113i Group PLC 1,8912Warburg Pincus LLC 1,7813Apax Partners Worldwide 1,6614GMT Communications Partners, Ltd. 1,6315Parcom Capital (FKA: Parcom Ventures BV) 1,6216AIG Capital Partners 1,4517Barclays Private Equity, Ltd. 1,3118Kohlberg, Kravis, Roberts & Co. (AKA: KKR)1,2919Charterhouse Capital Partners LLP1,2720Hellman & Friedman1,1521Bain Capital1,0922American Capital, Ltd. (FKA: American Capital Strategies)0,9623Odyssey Investment Partners, LLC0,9524Thomas H. Lee Partners (AKA: TH Lee Partners)0,7525TowerBrook Capital Partners L.P. (FKA: Soros Private Equity)0,68
 
Proprietary and Confidential All Rights Reserved © Prof. Oliver Gottschalg
GENERAL BACKGROUNDWhat are the data sources behind the rankings?
To obtain the most accurate picture of the universe of PE firms and their investments, we drew ona variety of available databases and performed a number of cross-checks of the information usedin this study.To calibrate our model based on the historic relationship firm performance and each of the fitnesscriteria, we drew on a proprietary dataset with information on the activity and performance of PEfirms (the HEC Buyout Database). This dataset contains detailed information on the investmentcharacteristics and performance of thousands of PE transactions over the past 30 years.To ensure consistency and comparability of the data, we used ThomsonReuter’s VentureXpertdatabase as the primary source for up-to-date investment activity. Both academics and practitioners generally consider VentureXpert and as one of the most reliable sources of industry-standard benchmark statistics.To further enhance the quality of the underlying data, we surveyed 211 PE firms in February2010. In this survey, we provided them with a list of investments made by their firm according toVentureXpert and invited them to confirm, update or correct the information as needed.
How have the evaluated PE firms been selected?
We initially gathered data from VentureXpert all investments made by buyout-type or generalists-type PE funds involving portfolio companies located in "Americas" or "Europe". Wefurther considered only the following investor types:
 
Fund Type
SBIC Affiliated with Commercial Bank
 
SBIC Affiliated with Investment/Merchant BankIndependent Private Partnership
 
Venture/PE Subsidiary of Other Fin. Institution
 
Evergreen Funds
 
SBIC Private PartnershipDirect Investor-Investment/Merchant BankCommercial Bank Affil. or Subsidiary PartnershipVenture/PE Subsidiary of Investment/Merchant Bank
 
Venture/PE Subsidiary of Commercial Bank
 
Investment Bank Affil. or Subsidiary PartnershipOther Fin. Institution Affil or Subsid. PartnershipVenture/PE Subsidiary of Insurance Company 

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