Kevin Dowd February 24, 2016
TPG Capital is reportedly nearing a $10 billion close on its seventh flagship fund—the firm’s largest raise since its massive $19.8 billion Fund VI closed in 2008, at the nadir of the financial crisis. The intervening years have been a bit of a roller coaster for the $70 billion AUM firm.
TPG Partners V, a $15.3 billion fund that began investing in 2006, was registering an IRR of just 5.38% as of 4Q 2015, placing in the bottom quartile of its benchmark, according to the PitchBook Platform. Fund VI, one of the largest PE vehicles ever raised, started slowly in the aftermath of 2008 but steadily improved performance in recent years, now offering a 12.82% IRR as of last quarter. That’s significantly better than its predecessor but still in the bottom half of its peer group—and well below the IRRs logged by rival funds from Apollo Global Management and Advent International that launched the same year.
Those less-than-sterling returns led to speculation that the firm would struggle to engage LPs for TPG Partners VII, which began seeking commitments in 2013. They also may have played a role in delaying plans for TPG’s long-rumored IPO.
But that hand-wringing is now old news. The firm appears to have assuaged any major investor concerns, and strong returns from this new vehicle could pave the way for a long-awaited public offering sooner than later.
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