In the tech world, companies are staying private for longer. Now, TPG Capital is trying to take advantage.
The buyout giant is looking to raise $1.5 billion for TPG Tech Adjacencies, a vehicle that will invest in tech, media and telecom businesses that are putting off public offerings, according to Bloomberg. The fund will reportedly offer liquidity to existing investors and employees in exchange for equity, the types of direct secondary sales that are becoming more common of late as sellers seek partial returns without completely exiting their stakes in companies that choose to remain private. The latest PitchBook-NVCA Venture Monitor has more on the trend.
TPG, which has an existing growth arm that was founded in 2007, declined to comment.
The news comes as two major companies that would be obvious targets of such a fund seem set to exit the private markets. Both Uber and Airbnb have announced they want to go public in 2019, in what could be two of the biggest VC-backed IPOs of the decade.
But overall trends seem to indicate TPG’s fund won’t be lacking for late-stage targets. The median time to IPO for VC-backed companies in North America and Europe sits at more than eight years, per PitchBook data, representing a big jump from 2006, when the median time was about five years. A volatile stock market driven by fears of a trade war and rising interest rates are two factors likely influencing companies to stay private.
On the other hand, the IPO market for PE- and VC-backed tech and media businesses in Europe and North America is off to a blazing start in 2018, with 11 public offerings so far, per the PitchBook Platform. That’s on pace to easily surpass last year’s total of 15. It’s also on track to top 2014’s total of 21 such public offerings as the highest mark since the financial crisis.
As for TPG? Well, the San Francisco and Fort Worth, Texas-based investor has at least one recent example of backing a media business that’s been slow to carry out IPO plans. Last June, the firm invested $450 million in Vice, giving the millennial-focused media conglomerate a valuation of roughly $5.7 billion. Vice, which started as a punk rock magazine in Montreal, has been private since it was founded in 1994.
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