Private equity is staking out a very important position on Wall Street, with increasing fees and earnings, the Financial Times reported.
According to the FT article, fees paid by private equity firms now make up 32% of U.S. investment banking fees. That’s $US6.5 billion out of $US20.4 billion in total banking fees, according to Dealogic.
FT also said this year is already outperforming the peak private equity frenzy of 2007, when private equity fees accounted for 24% of $US36 billion in banking. Private equity accounted for 12% of fees in 2008, and 2-3% of fees in the 1990s.
These firms have become investment banks’ largest clients as they reap the benefits from the last buyout frenzy in 2007, now taking large companies public. Low interest rates from the Fed have also helped firms refinance previous deals.
The Blackstone Group was Wall Street’s highest fee-payer last year at $US880 million. This year, The Carlyle Group is on track to become the next leader in fees, with $US696 million up to July 25, the Financial Times said.
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