Private equity firms invested more than $486 billion in U.S.-based companies in 2014, increasing investment by $43 billion over the previous year, according to the Private Equity Growth Capital Council’s (PEGCC) 5th annual investment report.
California was the leading state with $56.4 billion invested in 385 companies. That’s compared to $51.9 billion invested in 334 Texas companies, which was in first place in 2013 following the $25 billion acquisition of Dell.
“California had a number of large deals last year and Texas, while still very impressive, did not have another deal the size of Dell,” said James Maloney, spokesman with Private Equity Growth Capital Council (PEGCC), to Financial Advisor Magazine.
One area where private equity prevails in California is pensions, according to an article in the Boston Globe.
The $295 billion California Public Employees’ Retirement System (CALPERS) pension fund disclosed recently that it invests 9.6% of its money in private equity and gained almost double the money in returns at $24.2 billion from such investments since 1990. CALPERS shares the proceeds with managers of more than 700 private-equity funds.
“Private equity has the highest net returns in our portfolio,” said Ted Eliopoulos, chief investment officer with CALPERS, in a statement. “As a long-term investor, it is an important piece of our investment strategy and our mission to provide pension benefits for generations to come.”
At 29%, the business services sector attracted the most private equity investment, according to the PEGCC study.
“The consumer sector scored second place and information technology dropped from first to third,” Maloney told Financial Advisor.
The PEGCC study also found that New York and Florida moved up in the rankings from fourth to third and fifth to fourth place last year, respectively. Other states that moved up in the rankings were Ohio, which jumped from 12th to seventh, and Michigan, which went from 19th in 2013 to 11th last year.