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The founders and top executives of the largest private equity groups in the US have seen the value of their shares rise by over $40bn since the beginning of 2023 as new assets have poured into their firms.

Shares in Blackstone, KKR, Apollo Global, Ares Management and TPG have neared or eclipsed record highs due to better-than-feared financial results. Those earnings were buoyed by growth in the firms’ overall assets, particularly credit and insurance-based investment operations, which benefited from fast-rising interest rates.

The stock gains have come at a time of unease across Wall Street and underscored the groups’ diversification away from traditional corporate buyouts, which slowed dramatically last year.

Large investment banks have cut staff and slashed bonuses amid a slowdown in dealmaking caused by the rate increases. While private equity groups have struggled to sell investments and return profits to investors who are increasingly short on cash, higher yields have bolstered their less-heralded lending businesses, where assets and returns surged.

In 2023, $148bn of new investor money flowed into Blackstone, pushing its assets above $1tn, with the majority last year coming from its credit and insurance operations. Its private credit investments gained 16.4 per cent last year, results that helped to blunt earnings declines in its private equity unit.

Apollo Global raised even more, with $157bn of gross inflows in 2023. Nearly half came from its Athene insurance unit.

“The asset gathering over the past year has been extraordinary,” said Macrae Sykes, a portfolio manager for the Gabelli Equity Trust, which owns shares in both groups.

The Financial Times calculated gains since the beginning of 2023 on the shares of about 30 founders and executives named in proxy filings, including those of Carlyle Group. Blackstone’s Stephen Schwarzman saw his holdings increase the most, gaining over $12bn in value.

Blackstone has generated an 80 per cent total return when including dividends since 2023 and is now the world’s largest asset manager by market value. Its $155bn market capitalisation is also larger than Morgan Stanley or Goldman Sachs.

On an earnings call last month, Schwarzman said the group’s increasingly diversified business had insulated it from recent market turmoil. “We’ve designed the firm to provide resiliency in times of stress and capture the upside as markets recover,” he told analysts.

“These companies are proving that there are multiple avenues of growth for them by product, region and distribution channel,” said William Katz, an analyst at TD Cowen.

Collectively, the private equity groups generated $15.5bn in fee and spread-based earnings in 2023, an 11 per cent increase from the prior year.

Private equity groups stepped into fractured loan markets last year after the collapse of three large US regional lenders. Apollo Global originated nearly $100bn in debt in 2023, including large loans to German property group Vonovia and to Air France-KLM. Its lending was fuelled by its purchase of the securitised products unit of Credit Suisse a year ago, now called Atlas SP, and over a dozen other lending platforms it has built or acquired.

Blackstone struck lending partnerships with large regional US banks to help them originate debts, president Jonathan Gray told the Financial Times last year.

Other groups completed large acquisitions to bolster their credit investment capabilities. In November, TPG acquired credit investment group Angelo Gordon for $2.7bn, while KKR earlier this year took full ownership of insurer Global Atlantic, purchasing a remaining 37 per cent stake at a valuation of over $7bn.

Marc Rowan, chief executive of Apollo Global, has attributed the industry’s growth to a changing financial system in which an era of low rates and higher regulations pushed activity away from public markets and the banking system.

“In 2008, we had $44bn of assets under management . . . We’ve grown 14-times. That’s faster than Apple’s revenue [growth],” Rowan said last week, referring to Apollo’s $652bn in overall assets.

“I’d like to think that was all as a result of management acumen . . . but we are the beneficiary of macro industry factors that drove not just us, but our entire industry.”

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