The number of private capital firms, professionals is rising
The private capital industry was hit by the financial crisis and the number of new firms declined in its wake but there has been a rebound in recent years according to a new report.
Worldwide there are now around 7,500 active private capital firms employing around 200,000 professionals; and the number of new firms was 500 in 2016 and 309 in the first 10 months of 2017.
“The private capital industry has seen an overall trend of healthy growth, with the number of active firms in market increasing at a more rapid pace in the past couple of years,” commented Christopher Elvin, head of PE products at industry analysts Preqin which compiled the report.
The rebound of private capital hasn’t just been good news for finance professionals, there have also been good returns for investors.
“Since 2008, private capital distributions to investors have been growing as well, and in the last five years, distributed capital has outstripped annual called capital, with 2015 and 2016 seeing record amounts of capital returned to investors,” Elvin added.
The average number of employees per private capital firm varies with assets under management but North America has the highest average at 53 with Asia Pacific next at 42.
While firms with larger AUM tend to have more employees overall, they generally have fewer per $1 billion.
Total AUM for the sector at the end of 2016 was $4.6 trillion.
Elvin says that the growth for private capital is set to continue in 2018.
“However, it is important to note that most firms still have a low staff headcount, with the typical outfit employing just over a dozen people directly and outsourcing many of its compliance and back-room operations. Although the industry as a whole may be growing its workforce, it remains the case that only the largest firms have high headcounts,” he said.
