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Financial Services-Focused Private Equity Firms Revisited – July 2015

by Bradley McEwan

  • 28 Jul 2015
  • PE

The financial services sector has maintained a high level of interest among private equity firms since the industry was last explored by Preqin in August 2014. According to Preqin’s Fund Manager Profiles database, since August 2014 there has been a notable increase in the number of firms with a specific or wider focus on financial services, growing from 1,449 to 1,728 – an increase of 19% in 11 months. There are currently 62 active private equity firms that list the financial services industry as their sole focus. In total, $13.6bn has been raised by these firms over the last 10 years and they currently possess an estimated $3.6bn in dry powder. 

AnaCap Financial Partners is the financial services-focused firm that has collected the most capital over the last 10 years, having raised $2.5bn. The London-based firm was founded in 2005 and specifically targets opportunities within the European financial services sector. Preqin’s Funds in Market online service indicates that AnaCap Financial Partners is in the process of raising AnaCap Credit Opportunities III. The fund invests in consumer and SME debt across Europe, and follows on from the previous fund, AnaCap Credit Opportunities Fund II, which closed on £350mn in 2012. 

Lightyear Capital has raised $1.8bn over the last decade, the largest of any solely financial services-focused firm headquartered in the US. The New York City-based fund manager was founded in 2000 and focuses on buyout and growth investments in companies based in the US. In 2011, the firm closed the $954mn Lightyear Fund III, aimed at making buyout investments in the financial services sector. 

Banc Funds Company, headquartered in Chicago, focuses on growth investments in financial services. The firm invests in small companies that are based in the US and has raised $1.5bn over the last 10 years, with an estimated $408mn in dry powder.

As we can see from the chart above, the vast majority of financial services-focused firms are based in North America. The UK, with the financial hub of London, accounts for the majority of firms based in Europe, while 18% of solely financial services-focused firms are based in Asia or Rest of World. The geographic focus of investment for these firms tends primarily towards Europe and the US; however, a growing number of firms are aiming to invest in Africa, Asia and emerging markets. 

The financial services sector is a continued area of interest for private equity and venture capital investment, with improving technology and ever-evolving legislation leading to a need for innovation that presents investment opportunity. Financial services-focused venture capital has become more prominent in recent years, especially in London, with entrepreneurs looking to exploit the ‘Fin-Tech’ niche. Equally, India has been an area for financial services growth, with investors keen to take advantage of this budding industry in the world’s largest democracy.

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