PEI's Data Dive: The changing shape of private equity's biggest allocators

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0:30Welcome to the latest episode of PEI's new podcast series, Data Dive, where we unpack the numbers shaping private equity and explain what they actually mean. In this series, we'll dig into PEI's proprietary data, surveys and rankings, as well as recent market data sets to understand what investors and fund managers are thinking, where capital is moving and how the asset class is changing. Today's episode will focus on our GI 150 ranking, private equity's annual list of the largest private equity investors in the world based on their fair market value of their PE investment portfolios. We'll look at how investors have navigated the past year, who gained ground, who didn't, and what that says about the trends and challenges defining private equity today.

1:12I'm joined by Carmela Mendoza and Katrina Lau, both senior reporters at Private Equity International. Together, we'll dig into the biggest changes in this year's ranking and what they say about where the industry stands today. I'm Evie Russman, and this is PEI Spotlight.

1:35For listeners who may be less familiar with the GI 150, what exactly does it measure and why is it such an important snapshot of the institutional private equity market? Carmela, do you want to go first? Sure. Thank you for having us, Evie. Well, the ranking measures institutional investors' exposure to the asset class by the fair value of their PE investment portfolios at a single point in time. So for the 2026 ranking, that's 31 December 2025, that point in time, fair value methodology means it's attracting real market exposure across the whole LP universe, rather than commitments or pledges that may never get called.

2:13Thanks, Carmela. The first topic I want to jump into is private equity allocations. And the GI 150 allocated$2.88 trillion to private equity in 2025, not to mention total allocations increased 8.7 % year on year. Katrina, what does another year of allocation growth tell us about investor confidence in private equity? Yeah, LPs continue to believe that the PE model has a unique diversification benefit and is still a crucial part of their investment portfolios, whether they're using the strategic asset allocation model or the total portfolio approach. I think it remains a way to increase overall investment portfolio performance.

2:55I actually spoke to Jennifer Torr, who is the CEO for the Institutional Limited Partners Association for this. And for some of the LPs that she spoke to, while increasing or maintaining their allocation, they're also fine-tuning their approach. For example, moving into mid-market strategies to seek alpha, as we also see great appetite for mid-market strategies, especially in the US. And also in Asia, I think a lot of the investors are still growing their portfolios in the PE bucket. Yeah. So another statistic I wanted to throw out there is investors are now allocating on average 17 % of total AUM to private equity.

3:36Katrina, do you think that 17 % is becoming the new normal for private equity exposure or do you think there's still room for growth? Yeah, that's definitely interesting, Evie. I think my answer might not be very satisfying because I would say it's a thing that's to each LP their own. I think 17 % is an average. And actually in our ranking, we have 35 LPs with allocations above 20%. And then a handful of them have about 50 % or above. And definitely some of these LPs have a very PE heavy mandate. And some of them, for example, Japan Post Bank, they're a 1.5 trillion AUM institution and they only have 4 % allocated to private equity, but that accounts for, you know, multi-billion of capital to PE.

4:26So I think it varies a little bit across the rankings. And just quickly, Carmela, I know obviously the past year or so, it's been quite a challenging fundraising and exit environment. Do you think there's anything you'd like to add about why you think institutions are increasing their allocations or do you think we've already covered that? I think it shows that the fact that they are upping their allocations to PE means that there is still structural belief in the diversification sort of benefits of investing in private equity. In Katrina's article wherein she interviewed ILPA's Jennifer Choi, Choi frames this directly.

5:05She says diversification remains a resounding reason. LPs continue to see a place for PE in their portfolio. that's separate from short-term return concerns, which LPs have voiced out in the past 12 to 24 months or so. So PE is still viewed as a core portfolio driver and just recalibrated a little bit. Another thing is that there's a search for alpha in new places. As Katrina mentioned, mid-market is one that is definitely an attractive strategy for a lot of LPs. So rather than retreating, many LPs are moving into the mid-market to seek alpha. So it's a sign that institutions are adapting strategy, smaller checks, more relationships, new segments, rather than reducing overall commitment to the asset class.

5:51So we had a report in June from State Board of Administration of Florida, in which they said they were prioritizing mid-market Europe, less of buyouts in the US, and really doubling down on the return benefits of the mid-market space. So that's one example. And CalPERS has also said in the past year or so, mid-market is a priority for them as well as, you know, secondaries. So we're seeing a lot more of that coming up despite the tough fundraising environment. So PE has a lot more benefits than ever before, I would say. So far, we've talked about the amount of capital flowing into private equity.

6:32But perhaps the more interesting story is what sits behind those allocation decisions. For much of the past two years, the conversation around private markets has centred on slower exits, fewer distributions, and a difficult fundraising environment. Yet, the GI-150 suggests that many of the world's largest institutional investors haven't lost confidence in private equity itself. Instead, they're becoming more deliberate about where they deploy capital, refining their strategies rather than retreating from the asset class altogether. That shift in mindset helps explain many of the trends we'll explore throughout the rest of today's episode.

7:06Now, back to the discussion.

7:13Let's move on to the biggest investors, particularly the top 10. I know the ranking showed that the top 10 increased their allocations by 15 % year on year, and they now also account for around 40 % of all allocations within the ranking. and just throw another stat out there, the minimum allocation required to make the GI 150 increase to 3.96 billion. So that brings me on to my next question, which is the largest investors do appear to be pulling further ahead than a lot of the other firms or the other investors within the ranking. Do you think scale is becoming increasingly important? Katrina, if you want to take that one?

7:49Yeah, of course. I think to a certain extent, And definitely scale matters. I think especially when it comes to accessing top performing, oversubscribed managers, the largest institutional LPs definitely get prioritized. And the larger LPs will also have more bargaining power when it comes to getting co-investment rights, right? On top of the scale of deployment capital, I think the scale of the LPs team is increasingly important. whether they have the in-house capability to assess different strategies, including direct deals or even increasingly continuation vehicles, I think. Maybe I can add also that in terms of scale, you definitely see that there's a widening gap there in the rankings.

8:34So GIC, while we know they're very secretive when it comes to their investments and their PE portfolio, in their recent report, which we included in GI 150, They noted that they have a network of over 100 active fund managers. So that kind of GP access, as Katrina mentioned, and relationship depth, that's very hard for smaller LPs to replicate. Another point on scale is their ability to weather illiquidity. So the mega allocators, which you've seen in the top 10, 20 LPs in the ranking, can absorb the longer hold periods and weaker distributions that's troubling maybe other smaller LPs. So that means they're sort of built for the long term mindset.

9:18And that is only because they have that kind of scale in their assets under management. And Carmela, I just want to touch on that higher entry threshold for a moment. What would you say that tells us about the evolution of the institutional investor landscape? Right. I guess it means it reflects genuine market growth. We talked about scale earlier. So it's not just an inflation of the few outliers. There's a lot more. There's that entry bar, as you mentioned, is rising from 3.7 billion to 3.96 billion in this year's ranking. So the whole distribution is shifting upward, right? Not just the top, not just the top LPs.

9:57I guess it also suggests that the broad-based allocation growth across much of the list it's not a distribution being skewed purely by a handful of giants. And Katrina, in terms of comparison with GPs, are we seeing concentration among the largest LPs in the same way that we've seen concentration among the largest GPs? I would say yes. I mean looking at the ranking this year and last year, actually the top 10 investors didn't change too much. We're still seeing GIC, Temasek, the Singaporean sovereign wealth funds up top, and then mostly dominated by US-based investors and then some from the Middle East, right?

10:41But I would say for the top 10, there has been a little bit of change. Actually, two of them dropped out of the top 10 And from last year, that would be the Hong Kong Monetary Authority and also APG asset management. So others have moved up the ranks. It's an allocation number that changes year to year. But I would say to a large extent, the top 10 stays mostly the same.

11:10One theme that's becoming increasingly clear is that this isn't just a story about bigger portfolios. It's about the advantages that come with operating at scale. The world's largest institutional investors often have deeper relationships with fund managers, larger in-house investment teams and greater flexibility to deploy capital across different strategies and market cycles. Those advantages can influence everything from access to highly sought-after funds and co-investment opportunities to how they respond when market conditions change. The result is that the investors at the very top of the ranking aren't just managing more capital.

11:46They're often shaping the direction of the private equity market itself. So let's take a closer look at some of the movements within this year's top 10, where Singaporean sovereign wealth fund GIC overtook last year's leader, Temasek, to claim the top spot.

12:06Is there anything else that you'd say stood out in this year's movement at the top of the ranking, Carmela? So I guess the clearest headline move is a swap at number one and two between Singapore's Temasek and GIC. What makes this interesting isn't just the sort of the change of the pecking order. It's just that Temasek actually allocates a far higher share of its book to PE. So that's 49 % of AUM, right, compared to GIC, which is just 18. So they still landed second by absolute dollars. So that's a reminder that this ranking is a scale contest, which we talked about earlier, not a conviction contest.

12:44So the two Singaporean giants have very different portfolio philosophies, but they ended up almost neck and neck at the top, right? 163 billion and 168 for GIC. Sure. And I noticed that the National Pension Service of Korea moved into the top 10 for the first time this year. So Katrina, is there anything about that rise into the top 10 that tells us about where institutional investing is within Asia at the moment? Yeah, I love that you pointed that out because that's super interesting that National Pension Service of Korea, NPS, they're in the seventh largest allocator this year. I think looking at the bigger picture, I think this tells us that Asia is home to a community of very deep pocketed investors.

13:28I mean, if you look at the top 10, Temasek GIC always been in the top 10 for the GI 150 ranking. And then previously, you also have the Hong Kong Monetary Authority. And then this year, we also have NPS there. So NPS, for example, it has over a trillion in overall AUM. Actually, that's more than GIC, which is ranked as the top allocator. And also NPS has double the AUM of CPP investments, which is ranked third. And similarly, Japan Post Bank from Japan, obviously, has 1.5 trillion AUM, but only allocates about 4 % to private equity. I guess what I'm trying to say is that there is still a meaningful amount of LP capital waiting to be unlocked in Asia.

14:15And even just the 1 % increase from, let's say, NPS or Japan Post Bank would be opening up 10 to 15 billion of capital for private equity. So maybe there's still a lot more to be done in opening up the Asia pocket of LP capital. Great, that's super interesting. I just want to move on to LP strategies. And I know earlier, Carmela, you mentioned mid-market and how that's becoming increasingly popular with investors. Why do you think that is? Yeah, I think a few forces are pushing this shift. So one is return dispersion with several large investors voicing concern that private equity has been challenged relative to public equities.

14:57LPs are definitely looking for pockets of the market less crowded by capital. So that's the mid-market space with fewer megafunds chasing the same sort of large cap targets. So that's a source of differentiated returns for LPs. Another thing is that there's like a trade-off, a structural trade-off that's happening that they're willing to make. So moving into the mid-market often means writing smaller checks, as we mentioned earlier, and therefore covering more relationships. So more relationships means maybe a little more operational cost for LPs used to writing large tickets into a handful of megafunds.

15:32But that's something that LPs are willing to absorb amid all this complexity, right? So there's genuine conviction there for mid-market exposure. Maybe another thing is that it complements slower overall pacing. Since many investors are moderating commitment pays by roughly 15 % to 30 % due to weaker distributions, reallocating some of that reduced pace toward mid-market opportunities lets LP stay selectively active in PE without pulling back or cutting exposure across the board. So they're staying invested, more relationships, and then they're still in the asset class. So they're definitely targeting all the opportunities still.

16:16Another strategy that was apparent in the ranking is a total portfolio approach with half of the top 10 adopting that as a strategy. And I've noticed not just within private equity that that phrase total portfolio approach is cropping up a lot more. Katrina, could you explain what exactly is a total portfolio approach and why more investors are adopting it? I think the biggest differentiator is that the total portfolio approach looks at the investment portfolio as a whole and investment decisions are based on their contribution to the whole portfolio rather than setting target allocations for each asset class and rebalancing around those targets.

16:56I actually looked it up before doing this. So to put it simply, under a TPA, the investor would be asking the question, what investment best improves the overall portfolio's risk-adjusted return, rather than do we still have room in our private equity allocation bucket? So I think that wraps up the idea around TPA. Just to add as well that it's not something new, right? CPP first adopted it in 2006, but they didn't finish implementing the framework until 2016. And over that period, we've seen their AUM grow, you know, definitely from 100 billion 2006 to 780 billion Canadian dollars by end 2025.

17:37So you can see that it's been stress tested across two decades and multiple market cycles. That's one of the world's largest pension funds. and other examples of the top 10 largest investors in this year's ranking, half have adopted TPA. So that's GIC, Temasek, CPP, as we mentioned, and LaCasse have already implemented it, while CalPERS said it would apply the strategy beginning this month. Elsewhere in the ranking, APG, Asset Management, Ontario Teachers Pension Plan, and Alaska Permanent Fund have also adopted it. So it's increasingly supporting PE allocations. They have that flexibility, especially across market cycles.

18:14And they're not, as Katrina mentioned, siloed into specific target allocation buckets, which makes sense when there are many different things happening. Geopolitics, macro volatility, a lot of headwinds. So they can definitely flex their investments across the portfolio. Let's pause on that. The strategies we've discussed so far also reflect a broader evolution in how institutional investors think about portfolio construction. Rather than viewing private equity as a standalone allocation with fixed targets, many investors are taking a more dynamic approach, looking at how each investment contributes to the overall portfolio and where they can generate the strongest long-term returns.

18:56It's a sign that institutional investing is becoming increasingly sophisticated and that evolution isn't happening in one region alone. Digging into geographic data within the ranking highlights how different markets are approaching that challenge. Moving on to regional dynamics within the ranking, North America continues to be the home for the majority of investors within the ranking. However, regions like APAC and MENA continue to house some of the world's largest individual investors. Katrina, could you explain that dynamic of America dominating in terms of number of investors, but some of the world's largest allocators come from APAC and the Middle East?

19:38Yeah, for sure. I think it kind of reflects how the investment market has evolved over the years. You know, the US has always led the way in terms of private investments and then Europe and then APAC. So I think the sizes or the concentration of large institutional LPs also reflects that history. I would like to point out that actually from the rankings this year, there's an increase in APAC institutional investors. So there are 22 APAC-based LPs in this year's ranking, up from 19 last year. And as we pointed out earlier, the minimum is 3.96 billion, which is Nanshan Life at number 150. I think Asia LPs are getting much more sophisticated in terms of their PE investments.

20:29We're also seeing more LP-led portfolio sales in this region, and some of which are actually first-time sellers. So we're seeing a lot more mature in terms of PE deployment and also that flexible approach of their portfolio in part equity. If I may just add also, there's a structural sort of reason behind the type of investors between North America, which is mainly pension funds, and then APAC and MENA, which are fundamentally sovereign wealth funds. So GIC, Temasic, Adia, all in the ranking, they manage national wealth. That's oil revenue, foreign reserves, state investment capital. So there's no fixed liability schedule like pension payouts.

21:13So that means that doesn't force them to be conservative when it comes to building their asset liability matching. So that gives them more room to run higher conviction, higher allocation private markets programs. So Temasic is one example, right, which you mentioned earlier. They run roughly 49 % of the AUM in private equity, which is far higher than any pension fund that we know of in the US. I guess that's one thing to point out. Great. I'm glad you mentioned sovereign wealth funds there, Carmela. Would you say we're seeing an increase in the influence of sovereign wealth funds? I'd say based on our reporting, yes.

21:51They're definitely a lot more influential as investors now in private equity. As you mentioned, sovereign wealth funds, they run broader, more diversified global programs. So GIC's PE program spans primaries, co-investments, and secondaries across buyout growth and other strategies. They have a network of over 100 active fund managers, so they have a wider manager sort of approach. ADIA similarly allocates globally partnering with top-tier managers while pursuing selective direct and co-investment opportunities. We've talked about Demasic earlier. They have a more thematic direct investment model.

22:30They also have restructured themselves into how they invest. If I remember correctly, they do Singapore investments now and then global directs. And also the third one is fund commitments and partnerships. So they've done that in the past year or so, just definitely trying to tap opportunities wherever possible across those three strategies. And then when it comes to North American pensions, they're relying more into direct investing and co-investment at scale. So I guess those are the differences in terms of the type of LPs, but definitely sovereign wealth funds, very much up there. That's a capital that a lot of GPs are targeting.

23:07And looking at the regional differences again, Katrina, do you think there are any notable differences in how investors approach private equity within the regions? Great question. I think from the top of my head, I would say just thinking about geopolitical risk and also headline risks. In the US, there's definitely a slight pullback in terms of allocations to AIPAC private equity, just because of geopolitical tensions or policies that restrict US pensions and sovereign wealth funds even to invest in AIPAC. And moving on to some final questions, is there anything else that surprised you when analysing this year's ranking that we haven't discussed already?

23:52I guess in terms of what's surprising, the first is the resilience of growth, despite a lot of scepticism from the LPs themselves, which we've heard in panels and their investment advisory council meetings. So it's one thing to see allocations rise during a bullish stretch. It's more surprising to see the top 150 LPs in our list grow allocations by 8.7 % in the same year. So that means it's just the growth of the asset class, the growth in their allocations, despite skepticism, just means that there's a lot of belief in what the benefits of private equity will bring to their overall portfolio.

24:30So I guess it shows that LPs are distinguishing more clearly than before. and while they are voicing out their frustrations, it still is a huge benefit for them to be investing in private equities. It cannot be ignored, it's there. And maybe another thing aside from that resilience and growth there is the total portfolio approach. We'll definitely see a lot more LPs implementing that for all sorts of reasons that we discussed earlier. So those two are probably things that stood out more than expected. Great, and finally, Is there a particular trend that you think will have the biggest impact on investors over the next few years?

25:10I guess, yeah. Yeah, I think we do have some observations from this year's ranking, which, as we all pointed out, the adoption of TPA, Total Portfolio Approach. I think it's a reflection that LPs are taking a much more active approach towards private equity investments. I think gone are the days where you just put a lump sum of capital into a close ended fund and just wait for the returns to come back. I think it takes a lot more constant and regular review of your strategy and maybe even considering secondary sales or taking on continuation vehicle opportunities and whatnot to actually milk everything from your private equity portfolio.

26:01So I think it's going to be a lot more challenging for LPs going forward to manage a private equity portfolio just because there are just so many considerations on top of the ongoing volatility and geopolitical tensions. Great. Well, thank you, Carmela and Katrina, for joining me today. Thank you. Thank you, Evie.

26:28it's clear from today's discussion that the gi 150 is signaling where private equity influence is heading next and what that means for both managers and lps thanks again to carmella and katrina for joining me stay tuned for the final episode of pi data dive and visit private equity international.com to access the full gi 150 ranking here you can also download a data pack of the findings discussed in this episode. This episode was edited by Julie Bayeun and produced by Louise Fordham, as well as by me, your host, Evie Russman. Thanks for listening.

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