TPG credit team raising $8 bln-plus across three funds

  • Fresh capital could include around $5.5 bln for adjacent opportunities
  • New opportunities fund expected to launch soon
  • Dyal Capital took a 10 pct stake in TSSP last year

TPG credit platform TPG Sixth Street Partners is raising upward of $8 billion through several new funds that will invest in a wide range of credit and direct-lending opportunities,  Minnesota State Board of Investment documents show.

The TSSP team, led by former Goldman Sachs special-situations executive Alan Waxman, is raising $5.5 billion for “adjacent opportunities” to its direct-lending and distressed-debt businesses, which could include non-control investments. The adjacent fund would also invest alongside other TSSP funds opportunistically, the documents show.

TSSP is planning to raise $1.5 billion for a fund called TAO 4.0 and another $4 billion for a contingent vehicle that would be activated only if more distressed or dislocated opportunities arise.

Other distressed-debt investors, including firms like Oaktree Capital Group and Centerbridge Partners, also set aside large pools of capital for deployment in the event of an economic downturn.

Previous iterations of the adjacent funds, known as TAO 1.0, 2.0 and 3.0, were netting internal rates of return in the 9 percent to 18 percent range, according to private-placement-memorandum information cited by Minnesota documents. TSSP raised $9 billion through its adjacent-opportunities funds since the team’s launch in 2009.

The firm also is preparing to launch its fourth opportunities fund, which could raise around $3 billion. The actual size and fund terms for TPG Opportunities Partners IV — also known as TOP IV — have to yet to be set by the firm, the Minnesota documents say.

Although often thought of as a distressed-debt business, TSSP’s previous TOP funds also invest in healthy companies. The firm used TOP funds to provide convertible debt to music-streaming service Spotify as well as to invest in AirTrunk, an Australian data-center company.

TSSP’s previous fund closed on $3.2 billion in 2014 and was netting 10 percent IRR and 1.2x multiple as of Sept. 30, 2017, Washington State Investment Board information shows.

Fund II, which Washington marked as a 2012 vintage, was netting a 17.17 pct IRR and 1.7x multiple as of that date.

In 2017 Dyal Capital Partners took a 10 percent in TSSP, which reportedly valued the platform at $3.5 billion, according to the Wall Street Journal. The platform has roughly $20 billion under management.

TSSP declined comment.

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A woman counts U.S. dollars at a money changer in Yangon, Myanmar, on May 23, 2013. REUTERS/Soe Zeya Tun