The pension fund manager – whose private equity AuM and advisory business totals nearly €11 billion – surged to the top of Private Equity News’ ninth annual investor ranking on the back of its significant fire-power, its strong credibility with fundraising executives and its high-profile stance on fees and environmental and social governance issues.
The amount of capital it had to spend increased by nearly €2 billion in 2015 as it ramped up direct spending. Co-investment activity accounted for about 25% of its private equity investments through the year.
PGGM is a “highly desirable name” to bring on board and the team receives praise for being “very commercial” and “very straightforward to deal with”, according to fundraising executives.
Another fundraising executive said that its 17-strong team is “pretty well-resourced” and one of the “more active” public pension funds. The team, which is led by Eric-Jan Vink – a former dealmaker at Dutch private equity firm Gilde Buy Out Partners – will be expanded to approximately 24 people in the coming years.
PGGM grew its in-house private equity team quickly after it sold its stake in Amsterdam-based fund of funds manager AlpInvest Partners to Carlyle Group in 2011 and built up its own in-house private equity team – partly to reduce the double fee layer that pension funds face by investing through a fund of funds.
Once the mighty controllers of much of the capital that flowed into the asset class, funds of funds’ influence continues to wane. LGT Capital Partners remains in second place but other fund of funds, including London-based Pantheon – which was top of the list last year – Partners Group, SL Capital Partners, Adveq and Access Capital Partners have dropped further down the list.
The investment strategy, which groups investors into a fund that then invests in private equity funds, raised $ 15 billion in 2015, down from $ 49 billion in 2008, according to Preqin. One London-based investor relations partner said that “the smartest guys are at the fund of funds… but because they have less money they are becoming less meaningful”.
Instead, deep-pocketed pension funds are viewed as the most influential and desirable investors in European private equity, while other players such as Canadian pension funds, family offices and sovereign wealth funds are also rising up the ranks.
One placement agent said: “People see pension funds as stickier money and less hassle [than funds of funds].”
Private Equity News’ ninth annual investor list was compiled through detailed conversations with investor relations executives, placement agents and buyout executives, as well as data from data provider Preqin.
Additional reporting by Becky Pritchard