TPG’s Bonderman, Apollo’s Black Disagree on China, Going Public

  • TPG bullish on China, sees IPO at odds with long-term outlook
  • Apollo says China prices high, IPO helped fuel faster growth

Whether it’s investing in China or taking their firms public, two of the biggest names in private equity have differing views.

While TPG Chairman David Bonderman is bullish on China, Apollo Global Management LLC Chairman Leon Black says he has issues with the need to take on a local partner when investing there. The billionaires, speaking at a conference Friday in Singapore, also had diverging views on listing their companies.

Going public contradicts the notion of the firm being a long-term holder of capital, Bonderman, 73, said. While he didn’t rule out the possibility of an IPO “someday,” there was no reason so far to do so, he said.

Meanwhile, Apollo’s move to go public in 2011 had allowed it to grow faster and attract better talent, Black, 65, said. Apollo, founded by Black, Josh Harris and Marc Rowan, has diversified its business from leveraged buyouts to managing credit investments, real estate and hedge funds.

“Because we wanted to create an array of dozens of different credit products and real estate, and have another compensation vehicle to attract good people and use it as consideration to acquire other firms and add-ons, it was the winning answer,” Black said.

Fort Worth, Texas-based TPG is planning to seek at least $4 billion for its seventh Asia fund and will start raising money later this year, a person with knowledge of the matter said this month. In China, it has invested in companies including retail chain Wumart Stores Inc. and Shenzhen Development Bank Co., according to its website.

China Bulls

“We have been generally bullish on China,” Bonderman said. Notwithstanding the volatility and how foreigners are sometimes disfavored, China is a “pretty good place to be,” he said.

In contrast, Apollo deploys three-quarters of its capital for private equity and its credit funds in the U.S., and the remainder in places such as Europe, Australia and India, Black said.

“We just haven’t been able to figure out where our edge would be in China,” he said. “We think prices are relatively high in terms of what we like to do. In addition to that, we like to control our destiny and control most of the companies we invest in. In China, while that’s possible, for the most part, it requires partnerships which is an issue for us.”

Apollo’s assets under management rose to $186.3 billion as of June 30, from $172.5 billion on March 31. The increase makes the firm the second-largest U.S.-based manager of alternative assets behind Blackstone Group LP, which oversaw $356 billion as of June.

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