TPG opens data room on next flagship fund

TPG Capital is preparing to launch its next flagship pool into the maelstrom that is private equity fundraising market this year, with established firms jockeying to get a slice of investors’ limited allocations, sources told affiliate title Buyouts.

Fundraising this year is being fueled by established firms like Blackstone Group, Vista Equity, Thoma Bravo and others launching new funds at quicker-than-expected paces, putting pressure on limited partners’ pacing schedules.

It is not clear how much TPG will target for Fund IX. The firm closed its eighth flagship fund on about $11.5 billion in 2019, along with the firm’s debut healthcare-focused fund, which raised $2.7 billion, Buyouts previously reported.

Fund IX is expected to start raising in the first half of the year, the sources said. The challenge for managers will be to get on LPs’ allocation schedules amid a crowd of competitors also seeking capital. Larger, established firms with strong performance will have an easier time attracting re-ups from their existing investors.

Pressure will be on for TPG after its public listing earlier this month. The firm priced on the first day of trading at $29.50, and has risen to $35.40 in ensuring trading, before leveling off. The price closed Friday at $32.83. TPG manages about $109 billion, with about $52.6 billion in its Capital platform, which includes the flagship fund.

Public investors in private equity firms look for diversified revenue streams through new fees streams that come from new funds, including new product creation. The largest public private equity firms such as Blackstone, Apollo and KKR have all expanded into various strategies like private credit, real assets, secondaries and infrastructure.

Publicly listed firms generally do not share carried interest with public investors, according to sources.

Fund IX is expected to follow the firm’s strategy of investments in business services and industrials, consumer and retail, energy, healthcare, internet and digital media, software and enterprise tech.

The firm had two big exits recently, agreeing to sell its stake in McAfee in November to an investor consortium led by Advent International and Permira in a deal valued at around $14 billion. TPG also agreed to sell its portfolio company Wind River to Aptiv for $4.3 billion in cash.

TPG’s prior fund was generating a 98.9 percent net internal rate of return and a 1.9x multiple as of June 30, 2021, according to performance information from California Public Employees’ Retirement System. Oregon Public Employees Retirement Fund numbers for September 2021 showed a net multiple of 1.37x.

The firm’s seventh fund, which closed on $10.5 billion in 2016, was generating a 22.4 percent net IRR and a 1.93x multiple as of September, according to Oregon’s performance information.