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Financial Services-focused Private Equity Firms – August 2014

by Matthew Morris

  • 18 Aug 2014
  • PE

The financial services sector, in particular FinTech, has experienced a positive start to 2014, with the news of dedicated private equity funds and accelerator programs focused on providing capital to the industry. Players such as Startupbootcamp FinTech and Santander have been increasingly looking to make investments in technology-enabled financial service companies since the turn of the year. Preqin’s Buyout Deals Analyst database shows that in Q2 2014 GPs committed nearly $11bn to financial services enterprises worldwide, compared to under $5bn over the same period in 2013, indicating the strong growth in preference for investing in the sector. This blog will look at the private equity fund managers that focus on investing in financial service businesses. 

According to Preqin’s Fund Manager Profiles online service, there are currently 1,449 firms with a specific or wider focus to invest in the financial services sector, with a number of big names, such as the Carlyle Group, operating a specific financial services buyout division focusing solely on these investments. Regarding firms that are specifically looking to invest in the financial services sector, Preqin’s data reveals that there are 51 firms which have managed to collectively amass just over $10bn in capital commitments in the last 10 years.The US houses account for the vast majority of these firms, 34 in total, followed by the UK with four solely financial services-focused firms. Similarly, 67% of these firms focus their investment towards North America, either specifically or as part of a wider focus. While in recent times Europe has been the target for a great number of financially focused GPs, the US still has the majority of the firms and attracts the most capital globally. 

As stated by Preqin’s Funds in Market online service, there are currently 25 funds raising with a sole focus on financial services that are looking to amass over $10bn in capital. Similarly, there have been 230 funds closed since 2012 that focus on the financial services as part of a wider focus, with 18 of these funds specifically targeting the industry. These 18 funds have garnered an aggregate of just under $10bn to invest. The largest solely financial services-focused fund was Trident Fund VI, which raised $4.5bn in 2014 and looks to invest in North America and the US, as well as Western Europe. 

The media mentions that the venture capital market in FinTech is becoming a prevalent investment for many, especially in Europe and London. Observing this increasing trend, it is likely that the number of financial-focused firms and funds will continue to grow in the near future. 

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