TPG Capital Said to Near Halfway Mark on $10 Billion FundSabrina Willmer and Kiel Porter
TPG Capital, seeking to raise a $10 billion buyout fund after investing in soured mega deals such as TXU Corp. and Washington Mutual Inc., expects to secure about half of that amount by the end of January, according to two people with knowledge of the matter.
The $5 billion first close includes $2 billion previously obtained for a bridge fund from large investors such as Oregon Investment Council and Washington State Investment Board, said the people, who asked not be named because the information is private. TPG officially started raising the fund in July and has told investors it plans to gather $10 billion.
TPG, which controls $66 billion in buyout, credit and real estate assets, is trying to make a comeback after some money-losing investments during the buyout boom and financial crisis. The firm told investors that it plans to avoid mega deals that were responsible for some of the lackluster returns. Since 2009, TPG has made an average investment of $306 million and hasn’t participated in a consortium, or a takeover done by a group of buyout firms, according to a marketing document obtained by Bloomberg News.
Owen Blicksilver, a spokesman for Fort Worth, Texas-based TPG with Blicksilver Public Relations, declined to comment.
TPG’s private-equity peers have gathered billions of dollars from investors that are flush with cash from record distributions. Hellman & Friedman in November said it raised $10.9 billion for its latest buyout fund in less than a year. Carlyle Group LP in 2013 gathered $13 billion for its sixth fund dedicated to leveraged buyouts.
TPG, co-founded by billionaire David Bonderman in 1992, offered investors who participated in the first round of fundraising for TPG Partners VII a management fee break, the marketing document shows. Investors who commit to the first close will receive a 10 percent discount. The firm is also offering reductions to investors that make large commitments.
TPG invested in the $48 billion buyout of Texas utility TXU, now Energy Future Holdings Corp., which was also backed by KKR & Co. and Goldman Sachs Group Inc.; and in the $30.9 billion purchase of casino operator Harrah’s Entertainment Inc., now Caesars Entertainment Corp., which Apollo Global Management LLC co-led.
In its final megadeal, a March 2008 bailout of savings bank Washington Mutual, $1.35 billion mostly from TPG’s 2006 and 2008 funds was erased when the government seized the lender the same year.
The firm’s buyout performance has improved since the Washington Mutual collapse, helped by a surge in asset values. TPG’s $19.8 billion fund, raised in 2008, was producing an annualized gain after fees of 12 percent as of June 30, according to data compiled by Bloomberg. The $15.4 billion fund from 2006 was returning 4.9 percent.