TSSP hits hard-cap on debut growth fund

The firm has raised $2.2bn to back businesses that have grown beyond the purview of venture lending.

TPG Sixth Street Partners has held a final close on its inaugural fund that will make growth debt and structured equity investments, and hybrids of the two, the firm said in a statement Tuesday.

The credit manager’s TSSP Capital Solutions Fund hit its hard-cap of $2.2 billion, excluding TSSP’s unspecified GP commitment and surpassing the $2 billion target. It has invested more than $500 million of the vehicle so far. Growth companies are defined as those growing faster than the economy and requiring substantial investment.

The vehicle is expected to break down to 20-35 percent in growth debt, 30-40 percent in structured equity and 20-35 percent in hybrid debt-equity financings, according to November 2018 meeting documents from the San Luis Obispo County Pension Trust, which pledged $20 million to the fund. The portfolio companies are late-stage growth companies that have “reached critical mass” and are beyond the scope of venture lenders.

In addition to the San Luis Obispo commitment, TCS won allocations from the Michigan State Investment Board ($300 million), Washington State Investment Board ($200 million), Alaska Permanent Fund Corporation ($100 million) and Tulare County Employees’ Retirement Association ($20 million), among others.

The fund has an eight-year life, including a four-year investment period from date of final close, with up to two one-year extensions, according to the San Luis Obispo documents. The vehicle carries a management fee of 1 percent on committed capital and 1.5 percent on invested capital. TSSP will receive a 20 percent carried interest on any profits beyond the 8 percent hurdle rate.

“Private companies are looking for more options and greater flexibility when funding their next phase of development, and we look forward to creating those solutions,” Bo Stanley, a TSSP partner and co-head of the capital solutions strategy, said in a statement.

TSSP is the credit arm of TPG and manages more than $32 billion across multiple strategies, including distressed debt and direct lending. The firm has five US offices as well as locations in Hong Kong, London, Luxembourg and Melbourne.