Keep pulling the thread on Ian Charles.
The top 0.2% of private market firms, known as "Level 10s," manage 20% of the industry's total capital.
In 2024 alone, Blackstone, Apollo, KKR, and Aries collectively raised over $500 billion, and their market share is increasing.
Ted predicts that the "platform model" used by hedge funds like Millennium and Citadel will soon be adopted in the private markets.
Ted predicts that the largest alternative investment firms will eventually set prices, drive industry benchmarks, and determine the fate of many smaller, "orphaned" companies.
Ted speculates that Blackstone may evolve to become the private equity equivalent of Millennium's platform-based hedge fund model.
The leading private market firms, referred to as "Level 10s," are the only firms capable of meeting the needs of the growing private wealth, sovereign wealth, and insurance capital channels, according to Ian Charles.
Mega-firms have historically used acquisitions to grow their capabilities, such as Blackstone's acquisition of GSO and repeated acquisitions by Aries.
Mega-firms utilize joint ventures to broaden deal origination, exemplified by Apollo's partnership with Mubatala and Blackstone's minority investments alongside other private equity GPs.
Over 1,300 private equity firms are expected to attempt to raise funds in 2025, which will likely result in a surplus of high-quality talent unable to secure capital.
Ted believes a market opportunity exists to pair mega-firms, which have strong distribution but limited deal-making capacity, with middle-market firms that have strong deal-making capacity but weak distribution.