TPG Capital may join competitors Kohlberg Kravis Roberts, The Blackstone Group, The Carlyle Group and others on the public market, co-founder David Bonderman said at the SuperReturn International private equity conference in Berlin, according to reports.
“‘Contemplating’ is the right word for us,' Bonderman said, according to a Wall Street Journal report. 'We're thinking about it, but not too hard.'”
Bonderman went on to say that he expects most major buyout firms to eventually go public, and that limited partners failed to deliver on threats to withhold commitments to funds managed by publicly traded firms. In the past, many argued that the interests of public shareholders competed with those of fund LPs, who require firms to deliver the largest possible return on their funds’ long term assets. Shareholders demand regular distributable earnings, which are partially generated by management and performance fees paid by fund LPs and portfolio companies.
“The LPs have not put their money where their mouth is,” he said, according to reports, adding: “The LPs…have more cash than they know what to do with.”
Carlyle, KKR and other publicly traded TPG competitors engaged in a broad expansion of their product offerings in the years leading up to their respective initial public offerings. Although TPG still considers buyouts its core business – the firm will begin to formally market TPG Partners VII with a $10 billion target later this year – it has also built out its growth, credit and direct lending platforms in recent years.
Alan Waxman and Goldman Sachs’ former special situations team joined TPG in 2009 to lead the latter. Joshua Easterly, also a former Goldman partner, joined a year later and is now co-CEO and co-CIO of TPG’s specialty lending business.
The credit and direct lending platform has received a number of commitments from major limited partners over the last two months. The New Jersey State Investment Council cleared the way for a separate account with the platform in February, and TPG Opportunities Partners III – targeting $2.6 billion with a $3 billion hard-cap – is oversubscribed and expected to hold a close this month.
As of 30 June, TPG’s second opportunities partners fund had netted a 23 percent IRR and 1.12x multiple, according to New Jersey documents. A 2009 vintage fund had netted 22 percent and 1.46x.
For a longer look at TPG’s credit and direct lending platform, check out next month’s issue of Private Debt Investor.