TSSP collects $2.5bn to deploy across range of fund strategies

The firm has built out an array of platforms, including a formal growth debt product initiative launched last year, that are potential investment areas for its TSSP Adjacent Opportunities programme.

TPG Sixth Street Partners has collected $2.5 billion across its TSSP Adjacent Opportunities (TAO) strategy and its TAO Contingent fund.

The total, which was outlined in a series of Securities and Exchange Commission regulatory filings, will be deployed across all the credit investment powerhouse’s strategies, which include growth debt, direct lending and opportunistic credit.

The firm, which declined to comment, is targeting up to $4 billion for the TAO Contingent fund, according to documents from a March 2018 board meeting of the Minnesota State Board of Investment. The documents show TSSP sought $1.5 billion for the TAO programme, a total that was met last year.

TAO targets a 12-15 percent gross internal rate of return, according to May 2018 documents from the Pennsylvania Public Schools’ Employees Retirement System. The Harrisburg-based pension fund is a long-time investor in TSSP, which includes previous commitments to the TAO platform.

Documents from an October meeting of the New Mexico State Investment Council outlined TAO’s track record by investment year (calendar 12-month timeframe the positions were purchased): in 2012 and 2013, net internal rates of return of 19 percent and 8 percent, respectively. The 2014, 2015 and 2016 same-figure returns were 14 percent, 5 percent and 18 percent. All figures are as of 30 June.

Additional investors in the TAO programme include the Imperial County Employees’ Retirement System ($40 million), the Michigan Department of Treasury ($200 million), the Public School and Education Employee Retirement System ($15.45 million) and the Tulare County Employees Retirement Association ($50 million), according to PDI data.

The TAO Contingent fund will charge an 18.5 percent carried interest with a 5 percent hurdle rate; management fees are based on commitment size, with no fees being paid prior to activation of the fund, according to materials from the New Mexico SIC’s October meeting materials. The vehicle will only become active in a distressed or dislocation scenario.

The growth debt platform, TSSP Capital Solutions, is seeking $2 billion, according to pension fund documents from the Washington State Investment Board. In addition to growth debt, the fund will also invest in preferred equity and hybrid debt-equity financings, dubbed stapled solutions.

TSSP, TPG’s credit arm, manages at least $30 billion and was launched in 2009 by Alan Waxman and colleagues who worked together at the Goldman Sachs special situations group before the global financial crisis.