TPG Said to Reduce European LBO Team, Expand Real Estate

TPG Capital, the private-equity firm started by David Bonderman and James Coulter, is reducing the proportion of employees focused on European leveraged buyouts while adding to its real estate and distressed units, three people with knowledge of the matter said.

About 55 percent of TPG’s employees in Europe are focused on buyouts, down from 75 percent in 2010, said one of the people, who asked not to be identified because the move hasn’t been made public. About 15 percent is dedicated to investments in property and 30 percent to so-called special situations, compared with 25 percent three years ago, the person added.

Europe’s sovereign debt crisis has led buyout firms to cut back on their investments in the region as the supply of loans they rely on to finance their takeovers dwindled. The firms have announced $46 billion of European investments this year, down from $62 billion in the same period in 2012 and $111 billion in 2011, according to data compiled by Bloomberg.

TPG has about 60 employees in London, up from about 50 in 2010, the person said. Four members of its European private-equity team, including partner Dag Skattum, have left the Fort Worth, Texas-based firm since January, the people said. Other employees in the group have been reassigned to the real estate and special situations teams.

TPG hired Skattum, a former global co-head of mergers and acquisitions at JPMorgan Chase & Co, in 2007. He helped to put together the private-equity firm’s purchase of clothing chain Republic in 2010. The retailer sought protection from its creditors in February. Skattum, 52, didn’t respond to a telephone call seeking comment while a TPG spokesman declined to comment.

Woolgate Exchange

TPG’s real estate investments in Europe include the 265 million-pound ($406 million) purchase of the Woolgate Exchange, an office block in London’s main financial district, with Canadian property group Ivanhoe Cambridge Inc. in January. Globally, TPG has invested more than $2 billion of equity in properties.

TPG doesn’t publicly disclose the performance of its European private-equity holdings because it invests from a global fund, a $19.8 billion pool it raised in 2008. That had generated a 6.7 percent net internal rate of return as of Dec. 31, according to data published by the California Public Employees’ Retirement System.

TPG’s investments in Europe range from Grohe Holding GmbH, a German maker of bathroom fittings, to Lenta LLC, a Russian supermarket chain. The St. Petersburg-based retailer last week picked five banks to manage an initial public offering in London, which may value the company at as much as $5 billion, two people with knowledge of the matter said on June 13.

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