TPG raises $300m for energy-focused structured equity investments – exclusive

The energy market provided the firm with an opportunity to provide non-buyout preferred equity investments.

TPG has closed on an energy-specific structured equity vehicle that will target mid-stream oil and gas companies, a source familiar with the situation told Private Debt Investor.

The private equity behemoth hit the $300 million target for its TPG Energy Solutions Equity vehicle. The fund will invest in both public and private companies that are well-positioned for growth but have dwindling sources of capital available to them because of the commodity market rout, this person said. The vehicle will not invest in distressed energy companies.

A firm representative declined to comment.

Investments will range from $25 million-$75 million per transaction and will be in preferred shares or convertible preferred shares, which would likely be exercised in the event of the strategic sale or initial public offering of a portfolio company. Two investments have been made so far.

The San Francisco- and Forth Worth-based firm raised an energy-specific fund because it wanted a dedicated fund to back non-control energy-oriented investments rather than using its latest flagship buyout fund, the $10 billion TPG Partners VIII, a source said.

Several large energy-focused fundraises have taken place recently, though the funds may not necessarily do structured equity. Blue Water Energy raised $1.1 billion for a buy-and-build strategy, while EnCap Investments locked down $7 billion for growth financing to upstream oil and gas companies.

Founded by David Bonderman and Jim Coulter 1992, TPG manages more than $73 billion across private equity, credit, real estate and hedge funds.