TPG is upbeat about its outlook for fundraising and capital deployment, executives at the firm said on Tuesday’s earnings call.
The San Francisco-based PE firm said it has been expanding its LP base globally, boosting asset growth across credit, PE, and infrastructure strategies, and accelerating deployment in the lower middle market.
The firm’s total AUM grew to $229 billion as of June 30, 2024, up 65% from the same period last year.
In particular, the firm experienced stronger fundraising momentum this year for its credit business, which constitutes the lion’s share of capital it has collected from investors year-to-date.
Across all strategies, TPG raised $6.3 billion in Q2 2024, with over 70% coming from capital raised for credit.
TPG’s direct lending platform, Twin Brook Capital Partners, closed its fifth drawdown fund on $3.9 billion, 13% larger than its predecessor.
Twin Brook hauled in that capital by expanding its investor pool globally, particularly in Asia, and diversifying its LP base to include more sovereign wealth funds and multinational insurers in Europe and Japan, the executives said.
US LPs only constituted 36% of the LP base for Fund V, down from the roughly 61% in Fund IV, according to the call.
Fund V also significantly grew its share of commitments from insurers by 23% and sovereign wealth funds by 16%.
In the first half of this year, TPG amassed $6.6 billion across credit vehicles, more than doubling the capital it raised for the strategies in 2023. This puts TPG on track to beat its $10 billion annual fundraising goal.
The deployment pace for TPG’s credit businesses—from direct lending to structured credit—also accelerated.
The Twin Brook platform, which specializes in originating loans to sponsor-backed borrowers in the lower middle market, deployed a record $4.8 billion in capital during the second quarter, with 40% of that capital financing PE-backed add-ons.
For the structured credit business, the firm deployed $1.9 billion across consumer credit, specialty and mortgage finance transactions. TPG said it will look to accelerate deal activity in the second half of 2024.
Fee-earning AUM for the credit business stayed flat quarter-over-quarter but was offset by realizations.
On another note, TPG anticipates year-over-year growth in PE and infrastructure fundraising. The firm is in the market with its second Rise Climate fund, which seeks up to $10 billion, and the new Transition Infrastructure fund, which expects to hold a first close before the end of this year.
TPG said after-tax distributible earnings—which includes cash that can be returned to shareholders—grew to $207 million in the second quarter, up from $96 million in the same period a year ago. The increase was supported by an accumulation of fee-related earnings and investment sales.
The asset manager defied the challenges in realizations that some other PE firms are experiencing. The Carlyle Group, for instance, reported Monday a YoY decline in profits, as the firm took home thinner performance fees from deal exits.
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