TPG Scores Big Windfall with Quintiles, Northern Tier IPOs

TPG has had much luck tapping the IPO market during the past 12 months.

The PE firm’s most recent success was the public offering of Quintiles Transnational Holdings last week. TPG’s investment in Quintiles dates back to 2003 when the PE firm, along with One Equity Partners and Temasek, took the company private in a $1.7 billion management buyout. TPG invested $90 million equity at the time, according to SEC filings.

In 2007, Bain Capital and TPG bought One Equity’s stake in Quintiles in a deal valued at $3 billion. TPG invested another $424 million equity, a source says.

Quintiles has paid out about $1.5 billion in cash dividends to shareholders since 2008, a February regulatory filing says. This includes $67.5 million in 2010, $288.3 million in 2011, and, in 2012, shareholders received $567.9 million in distributions, an April SEC filing says.

It’s unclear whether the firm paid out more dividends in prior years. TPG, which owned 22.9% of the company prior to the IPO, appears to have received about $345 million. Quintiles last week raised $947.4 million when it sold 23.7 million shares at $40 a share. The drug testing firm closed Tuesday at $44.43.

Before the Quintiles offering, TPG owned 26.48 million shares, or 22.9%. PE firms typically don’t sell many shares during IPOs. TPG sold off a small chunk, about 1.4 million shares, which, at $40 each, means it received $56 million. After the IPO, TPG’s stake fell to roughly 22.5 million share, or 17.5% (assuming the greenshoe was exercised).  TPG’s holding is valued at about $1 billion.

TPG’s investment in Quintiles, however, comes from two separate funds at two separate times. The initial $90 million investment is valued at roughly 10x the original investment, including realized and unrealized gains, the person says. The second investment of $424 million is valued at 2.5x to 3x, the source says.

Northern Tier Energy
The IPO of Northern Tier Energy (NTE), which went public last year, is another success. TPG and ACON Investments formed NTE in 2010 when they acquired the Minnesota downstream assets of Marathon Oil in a deal valued at $900 million. TPG and ACON invested about $550 million, including debt, according to SEC filings. The investors put in about $200 million equity, the source says. A little less than half came from TPG.

NTE, an independent downstream energy company, went public in July at $14 a share. ACON Refining and TPG, after the IPO, each owned roughly half of Northern Tier Holdings.

Northern Tier Holdings owns 82.3% of NTE, according to SEC filings.

After the IPO, Northern Tier Holdings owned 57.3 million shares in NTE. Neither TPG nor ACON unloaded shares until January when Northern Tier Holdings sold 10.7 million shares in a secondary at $24.46. The deal generated gross proceeds of $261.7 million. TPG was entitled to roughly half of the proceeds or about $130 million.

Northern Tier Holdings unloaded another 12 million shares earlier this month at $26.28. The sale generated gross net proceeds of $315.36 million. TPG stands to gain roughly half or $157 million.

Assuming the greenshoe is exercise, Northern Tier Holdings will have 47.1 million shares of NTE, or 51.2%. NTE ended Tuesday at $26.50 and Northern Tier Holding’s stake is valued at roughly $1.2 billion. TPG’s cut is roughly half, or $611 million.

Northern Tier shareholders also received a $40 million equity distribution in May 2012, according to SEC filings. Including unrealized gains ($130 million + $157 million + $611 million +$40 million), TPG has made roughly 9.4x its initial investment, including paper gains.

Norwegian Cruise Lines
Another profitable deal was Norwegian Cruise Lines, which went public in January. TPG, in 2008, acquired a 12.5% stake in Norwegian Cruise line for $250 million, SEC filings show. TPG, which owned 22.1 million shares before the IPO, did not sell stock in the offering but its holding fell to 10.8%.

Due to a 180 day lockup, TPG has yet to unload any Norwegian Cruise line shares. The company’s stock closed Tuesday at $30.76 a share. This means TPG’s stake of 22.1 million shares is worth about $680 million. Including paper gains, TPG has made 2.5x its original investment.

Taylor Morrison
Lastly, Taylor Morrison also went public in April at $22 a share. Investors including TPG and Oaktree Capital Management bought the home builder in July 2011 for $1.2 billion. TPG invested $622 million equity but a $240 million bridge loan cut the firm’s exposure to about $380 million, the source says.

Before the IPO, Oaktree and TPG each had about 54.8 million or 48.6%. TPG sold more than 10 million shares, the source says. TPG, as part of an April 9 put/call agreement, sold roughly 11 million class B shares at $20.68 each, according to an SEC filing. The PE firm received about $230 million from the sale. TPG currently owns roughly 43.6 million Taylor Morrison shares.

Taylor Morrison’s stock closed at $26.65 Tuesday. This means TPG’s stake is valued at about $1.16 billion. Including unrealized gains, the firm has made more than 3x its money, the source says.

TPG declined comment.

First and second photo courtesy of Shutterstock