TPG Eyes Debt Assets Sold by Hedge Funds

HONG KONG (Reuters) – David Bonderman, one of the the most influential figures in the U.S. private equity industry, said on Thursday his firm, buyout giant TPG Capital TPG.UL, wanted to buy debt assets offloaded by troubled hedge funds.

Bonderman, speaking at the Asian Venture Capital Journal (AVCJ) conference, also said a global recession would be deep and prolonged, and the U.S. housing market would probably fall further.

“When people are giving you debt that is grossly mis-priced, you opt to take it,” he said at the conference in Hong Kong.

Volatile markets have forced hedge funds to sell off assets and securities to pay back investors who are keen to scale back on risk and hold cash.

But private equity firms typically have long-term investors, with up to 10-year lock-up periods.

“Since a lot of hedge funds have a side pocket with a two- to three- to four-year lock-up period, that means that liquid assets are under great pressure,” Bonderman said. “And guys like us who have the capital should be buying them.”

Asia would emerge from the global downturn earlier than elsewhere and was well-positioned for recovery, said Bonderman, TPG’s founding partner.

He also said culprits in the credit crisis included the accounting profession and mark-to-market accounting rules, adding that banks had been shoring up their balance sheets but had not been providing liquidity.

TPG Capital, formerly Texas Pacific Group, is one of the largest private equity firms in the world, with more than $50 billion under management.

By Michael Flaherty
(Editing by Anne Marie Roantree)