Private-equity firms sometimes attract controversy. They also attract something else: interest from a wide variety of institutions.
Investors ranging from pension plans and charities to global insurance companies and university endowments have placed money with private-equity firms.
Public and private pension funds represent 43% of all the money invested with leveraged buyout firms in 2010, the most-recent year tracked by the Private Equity Growth Capital Council. Foundations represented 12% of the money invested.
What is the appeal? For one, the returns. While stocks have spent the last decade treading water, and bond yields are near all-time lows, private-equity firms on the whole have scored gains for their customers.
Top 10 Investors in Private Equity
| Name of Firm | Allocation to Private Equity (in millions of dollars) |
| 1. AlpInvest Partners Netherlands | 53,786 |
| 2. HarbourVest Partners U.S. | 34,000 |
| 3. Goldman Sachs Private Equity Group U.S. | 34,000 |
| 4. Credit Suisse Asset Management Switzerland | 33,000 |
| 5. California Public Employees’ Retirement System (CalPERS) U.S. | 32,000 |
| 6. Kuwait Investment Authority Kuwait | 29,600 |
| 7. Credit Suisse Customized Fund Investment Group U.S. | 27,707 |
| 8. Pathway Capital Management U.S. | 26,000 |
| 9. Pantheon Ventures UK | 25,040 |
| 10. CPP Investment Board Canada | 24,837 |
Source: Pregin
As of September 2011, median private-equity returns for large public pension funds over the past five years was 6.63%, according to Wilshire Associates. Median stock-market returns for those funds were a negative 0.86% over that same five-year period.
Another allure:
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