Back to School: The usual suspects top state rankings

California and Texas topped the Private Equity Growth Capital Council’s annual ranking of states by annual private equity investments, just as they did in 2012 and 2013.

“It’s the usual suspects,” said Bronwyn Bailey, who leads the lobbying organization’s research department.

The Golden State secured top billing, with private equity firms investing $56.4 billion in businesses based in the state last year. The 2014 total represents a slight increase from the $54 billion sponsors invested in California companies the year before, according to PEGCC.

Overall investment in U.S.-based businesses ticked upwards year-over-year, according to PEGCC’s analysis, which relies on data provided by PitchBook. General partners committed $486.4 billion to domestic deals in 2014, a $43 billion increase from the previous year.

The number of portfolio companies acquired also spiked, with sponsors buying 3,139 companies last year compared to just 2,368 companies the year before.

“Investment is on a steady pace,” Bailey said. “Most people think of private equity as investing in the mega-buyouts. This year the average amount was a little lower, but the total number of portfolio companies was greater.”

Dearth of mega-deals

“One thing that distinguishes 2014 from 2013 is that there was no mega-LBO that dominated the headlines,” said Bailey. “Last year, the Dell deal alone was $24 billion, and that was what, 5 percent of all of last year’s investment capital?”

Silver Lake’s acquisition of Dell propelled Texas to the top of the list in 2013, when private equity firms invested $87.4 billion in the Lone Star State. Texas slid from the top ranking to No. 2 in 2014 with approximately $52 billion in private equity investments, according to PEGCC.

The absence of a major deal also caused Pennsylvania to take a tumble in the rankings. 3G Capital and Warren Buffett’s Berkshire Hathaway paid more than $23 billion for Pittsburgh, Pennsylvania-based H.J. Heinz Company in 2013. Last year, total private equity investment in Pennsylvania fell by more than 50 percent year-over-year – from $44.4 billion to $20.3 billion.

Big city, big money

PEGCC also ranked private equity investment by congressional district. Unsurprisingly, districts containing major metropolitan areas dominated the top of the list.

Democrat Carolyn Maloney’s district, which contains the east side of Manhattan as well as western neighborhoods in Brooklyn and Queens, grabbed the No. 1 spot with $18.2 billion invested across 86 companies. The Chicago district represented by Danny Davis, also a Democrat, placed second with $8.6 billion. Republican Kenny Marchant’s district, which encompasses the Dallas-Fort Worth area, ranked third with $8.1 billion.

See PEGCC’s 2014 report here.

See PEGCC’s 2013 report here.

Top 20 states by Investment Value
(In $ bln)
California $56.40
Texas $51.90
New York $42.80
Florida $33.90
Illinois $29.40
Pennsylvania $20.30
Ohio $20.20
Georgia $18.10
New Jersey $16.70
Massachusetts $16.50
Michigan $16.20
Tennessee $14.10
Colorado $13.50
North Carolina $10.90
Virginia $9.80
Wisconsin $8.90
Washington $8.70
Maryland $8.20
Arizona $7.80
Oklahoma $7.30
Source: Private Equity Growth Capital Council