TPG raising $3.5bn open-ended special situations fund

The US alternative investment firm will use its TSSP Adjacent Opportunities Partners vehicle to invest alongside its various other credit funds and platforms.  

TPG is in the process of raising its third TSSP Adjacent Opportunities (TAO) Partners fund. The open-ended vehicle is targeting $3.5 billion, according to LP documents. The strategy will invest alongside TPG’s various credit funds and platforms within the firm’s special situations partners (TSSP) business. The firm has been opening separately managed accounts with the limited partners that invest in the vehicle.

TPG declined to comment.

The TAO vehicle will invest in the TPG Opportunities Partners distressed-for-control strategies, as well as the TSLX and TSLE direct lending platforms. TPG Specialty Lending (TSLX) is the firm’s US-based BDC which engages in direct lending. TPG Specialty Lending Europe (TSLE) is TPG’s dedicated European direct lending platform that was formally set up earlier this year. TSLE is a closed-end private fund and is about half-way to its €800 million goal.

TAO will also opportunistically target special situations such as defensive yield, non-control stressed and distressed and asset-based lending, according to documents published by Texas Municipal Retirement System, which is investing $75 million in the vehicle.

The Pennsylvania Public School Employees Retirement System (PSERS) also invested $250 million in the TAO strategy last month. PSERS, as well as the New Jersey Division of Investment, the Oregon State Investment Council and the Florida Board of Administration, among others, invested large amounts of money with the predecessor TAO vehicle, which raised $2 billion last year.

The fund’s open-ended structure will give limited partners the ability to realise their positions following the fifth anniversary of their initial commitment. At that point, the investments will no longer be recycled towards new deals and LPs will have the option of re-upping with TPG or taking distributions, investor documents show.

Fort Worth, Texas-headquartered TPG has about $12 billion in assets under management in its special situations platform. The credit business is co-run by Alan Waxman and Joshua Easterly, who joined the firm from Goldman Sachs in 2008 to set up the TPG debt business. The private equity firm was founded in 1992 and has $75 billion in assets under management. TPG’s other US offices are in New York, San Francisco, Austin, Dallas and Houston. It also has 11 international offices.