Shares in some of the biggest US private equity firms have risen strongly in recent months. And a lot of it has to do with recent changes in their tax structure.

PE giant Blackstone closed on the weekend at $US53.66 ($77.64), up from less than $US40 at the end of May.

That rise was accompanied by the Leon Black-led Apollo Global Management, which is trading at all-time highs above $US40, up from $US29.41 on May 31.

Interestingly, a report in the FT shows the recent appreciation wasn’t so much driven by lucrative deal-making the major PE players are known for.

Instead, the catalyst was a shift in their corporate structure — from a partnership to a corporation.

The partnership structure was more tax effective, allowing the firms to pass on more money directly to their investors. However, it also meant PE firms were saddled with cumbersome tax filings across multiple state jurisdictions.

And with the passage of the Trump administration’s corporate tax cuts in 2017, the cost-benefit equation wasn’t quite so clear-cut.

In particular, that’s because switching to the legal status of a corporation gave the big listed PE firms a key advantage: access to tracking indexes which opened up capital flows from huge passive investment companies such as BlackRock and Vanguard.

As a case in point, Apollo’s inclusion on major indexes provided the gateway for Vanguard to purchase 13m shares in the company.

Private equity firm Ares was the first listed company in the space to make the switch. Blackstone followed in April, just before its share-price took off at the end of May.

The new paradigm meant the cost of lost tax savings were more than outweighed by the appreciation in each company’s share price.

And that’s led to an on-paper windfall for the principals at the major PE players.

For example, Blackstone founder Steven Schwarzman has seen the value of his fortune swell to around $US12.5 billion — a gain of more than $US3 billion since the new rules were implemented.

The net effect of higher share prices is that it could free up capital for more big PE deals — with companies in the space already sitting on record levels of dry powder ready to deploy.