PeHUB-TPG seeks $8 billion to $12 billion for next buyout fund

Wed Nov 7, 2012 6:05pm EST

* TPG to begin marketing for fund VII next year

* TPG gauging LP interest in fund VII

* Fund VI is 66 percent invested

By Luisa and Beltran

NEW YORK, Nov 7 (Reuters) - TPG Capital LP, the private equity firm founded by David Bonderman and James Coulter, is looking to raise between $8 billion and $12 billion for its next global buyout fund, two placement agents said.

Fort Worth, Texas-based TPG, which has $51.5 billion in assets under management, is gauging support among existing investors for Fund VII, one placement agent said on condition of anonymity because the information is confidential.

Fundraising for TPG Partners VII is expected to begin during the first half of 2013, the person added.

"The feeling seems to be that a realistic target would be about $10 billion," the source said.

The $8 billion to $12 billion target could also include TPG's Asia-related funds, the second source said.

TPG declined to comment.

TPG is expected to vie against other large buyout shops for capital. Bain Capital LLC, which has about $66 billion in assets under management, is currently out marketing for its latest mega fund, which has a $6 billion target. Apollo Global Management LLC, which manages $105 billion, is expected to begin fundraising for its latest buyout fund this year. Apollo is reportedly seeking $10 billion to $12 billion for the pool.

TPG's seventh fund is coming in much lower than its last pool. In 2008, the buyout shop collected $19.8 billion with its sixth global buyout fund, TPG Partners VI. The pool is "troubled," the second placement agent said. TPG VI has generated an internal rate of return (IRR) since inception of 1.46 percent, according to March 31 data from CalSTRS.

Fund VI was 66 percent invested as of June 30, according to Preqin. Private equity firms typically begin marketing once funds are about 70 percent invested.

TPG's prior pool, Fund V, amassed $15 billion in 2006. The pool is producing a negative 4.67 percent IRR since inception, CalSTRS data showed.

Dow Jones LBO Wire, which first reported the fundraising for Fund VII, said TPG plans to begin marketing for the pool next year.

Notable investments for TPG's fund VI include the J.Crew Group. Last year, TPG and Leonard Green & Partners acquired the clothing retailer for about $3 billion. TPG, more recently, agreed to buy FleetPride, a retailer of heavy-duty truck and trailer parts, in October. In July, the buyout shop also inked a $1.9 billion deal for Par Pharmaceutical, the generic drug maker.

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