TPG Capital’s strong week on the fundraising trail continued Wednesday with news that The Oregon Investment Council had approved massive commitments to a pair of the firm’s vehicles. Oregon announced the commitments through its Twitter page.
The $87.5 billion public pension allocated $250 million to an opportunistic vehicle, TPG Special Situations Partners Adjacent Opportunities fund, which has been created to provide TPG’s special situations group with flexible capital to pursue opportunities that exist outside Opportunities Partners Funds and its Specialty Lending fund mandates, according to a TorreyCove Capital Partners memo.
Those strategies would consume approximately 50 percent of the fund’s investment capital and would include medical royalties, residential and commercial real estate, infrastructure special situations and structured European whole loans.
The remainder of the vehicle would be co-invested alongside TPG’s Opportunities Partners and Specialty Lending funds or in other opportunities sourced from the TPG platform.
The Adjacent Partners Fund has an open ended structure with a 36 month initial commitment. An OIC memo describes management and incentive fees as being below market averages, though the fund also has a lower preferred return.
The larger of Oregon’s two commitments went to TPG Capital Partners Strategic Account, which will serve as an interim buyout fund that will roll into the firm’s Fund VII. Oregon committed $700 million to the buyout vehicle, which has been designed to bridge the period between expiration of TPG Partners Fund VI and the activation of TPG Partners VII.
The fund will invest in similar strategies as previous Partners Fund vehicles.
Last year, Oregon State Treasurer and Investment Council member Ted Wheeler publicly rebuked TPG for its handling of Caesars Entertainment, which has struggled under a massive debt load since it was acquired by TPG and Apollo for $30.7 billion in 2008. Caesars was carrying $20.9 billion total debt load as of 30 September, according to a US Securities and Exchange Commission filing.
Wheeler specifically cited concerns with TPG management fees associated with that investment and their effect on performance, as well as the company’s at-times contentious negotiations with organised labour. Oregon is a limited partner in TPG Partners V, which the firm used to acquire its stake in Caesars.
“As you know, there have been headlines about labor negotiations at Caesars. I look to our partner firms to create opportunities and to treat employees fairly,” Wheeler wrote in a letter to TPG co-founder Jim Coulter. “This is an opportunity to show how private equity is a positive catalyst for both the economy and for the beneficiaries of institutional investors.”
The Investment Council’s latest commitments to TPG were approved unanimously. A spokesperson for Wheeler told Private Debt Investor that there was no discussion of the letter at the meeting, and that “the union just ratified a new contract that the union has described as ‘an equitable settlement.’ That is good news”.
Caesars refinanced $4.4 billion in CMBS facilities last year. On Wednesday, Caesars employees approved a five-year contract with the company’s culinary union, according to a Las Vegas Review-Journal report.