Corporate investors may not be the most numerous group of institutional investors in the private equity universe, but they do have financial firepower. Preqin’s Investor Intelligence online service currently tracks 284 corporate investors, with total assets under management of $4.4tn and approximately $14bn allocated to private equity. Preqin has data for 5,874 investors that are actively investing in private equity; these investors have total assets under management of $107tn, meaning that corporate investors account for fewer than 5% of all investors committing capital to the asset class.
According to Preqin data, venture capital funds are attracting the lion’s share of corporate investors’ private equity commitments. Of the corporate investors tracked by Preqin, 216 (76%) have a preference for investing in venture capital funds (including seed, early stage, start-up, expansion and late stage). Just a quarter (71) of corporate investors incorporates buyouts into their strategy and fewer than 8% (22) of these investors are focused exclusively on buyouts. In recent years, there has been a rise in the number of corporate venture capital funds; names such as Google, Twitter and Siemens all have dedicated venture capital arms for predominantly direct investments. Corporate investors exhibiting a preference for venture capital investments is logical; firms want to keep on top of the latest developments in their specific fields.
Ranking the top 10 corporate investors by assets under management leaves the $300bn Power Corporation of Canada on top of the list; the firm has a current allocation to private equity of 0.12% ($364mn) looking to invest in both buyout and venture capital funds in Europe and the US. The $203bn retail giant Wal-Mart sits in second place, allocating its funds solely to co-investments in the US and South America, just ahead of the $175bn technology multinational Microsoft, which has a diversified portfolio including venture capital, buyout, distressed debt, growth, mezzanine, natural resources, secondaries and special situations funds. Unsurprisingly, the $131bn search engine Google also features in the top 10. Google is mainly committing capital to global venture capital and growth funds.
Western Europe-headquartered corporate investors take three of the places in the top 10. The $155bn Anglo-Swiss multinational commodity trading and mining company, Glencore, takes fifth place and is the only investor in this selection allocating its funds exclusively to buyout funds. The $131bn Spanish telecommunications giant Telefónica, and the $125bn healthcare leader Novartis, are also some of the largest players in the corporate investor universe.