| TIGARD, Oregon
TIGARD, Oregon Jan 29 TPG Capital LP, a private
equity firm that is behind some of the world's largest leveraged
buyouts, said on Wednesday it was asking some of its key
investors for up to $2 billion to spend on deals until it raises
a new $10 billion flagship fund.
Founded in 1992, TPG has been one of the private equity
industry's most successful firms, turning its founders, David
Bonderman and James Coulter, into billionaires. But some of its
bets went sour in the last six years, weighing on the
performance of its funds.
TPG told a public meeting of one of its investors, the
Oregon Investment Council, that it was seeking between $1.6
billion and $2 billion for an interim fund that was intended to
serve as "bridge investment capital" until it starts raising its
first major global fund since the financial crisis. It raised a
$19 billion fund, called TPG Partners VI, in 2008.
Last summer, TPG received permission from its investors to
extend the investment period of TPG Partners VI by one year to
TPG Partners VI was valued at 1.25 times its investors'
money as of the end of September 2013, according to the Oregon
Public Employees Retirement Fund. The previous flagship fund,
the $15.3 billion TPG Partners V fund that was raised in 2006,
was valued at just 1.06 times its investors' money.
"You will, from time to time, make mistakes. The important
thing is to learn from them," Coulter told the meeting of the
Oregon Investment Council on Wednesday.
TPG asked the Oregon Investment Council for a $700 million
commitment to the bridge fund, which was approved. Dubbed the
TPG Strategic Partnership Interim Fund, the bridge fund will be
rolled into the next flagship fund that TPG is planning to
raise, TPG Partners VII.
"Fund VII is 'make or break' for these guys," Oregon State
Treasurer Ted Wheeler told the meeting.
Coulter said he expected that TPG would raise around $10
billion for TPG Partners VII. The bridge fund would let the firm
delay fundraising for TPG Partners VII for six months and keep
its focus, he added.
The bridge fund is the clearest sign yet that TPG's fund
performance has affected its fundraising plans.
"We think that it is right and proper that we go to our best
partners and look for their support," Coulter said, adding that
TPG had turned to a couple of key investors besides Oregon's
public pension fund manager for the bridge fund.
TPG said the bridge fund will target its "sweet spot" -
buyout transactions requiring $250 million to $600 million of
equity capital, mostly in North America. Some deals in Europe
and Asia are also within the bridge fund's scope.
TPG, which has $55.7 billion of capital under management
according to its website, made huge bets that went sour on
companies such as Texas power utility Energy Future Holdings
Corp, casino operator Caesars Entertainment Corp and
floundering bank Washington Mutual Inc. During the financial
crisis in September 2008, federal regulators seized Washington
Mutual and reached a deal to sell most of its operations to
JPMorgan Chase & Co.
TPG is hoping that some recent lucrative exits from its
investments, such as the $6 billion sale of department store
owner Neiman Marcus Inc in October and the $2.9 billion sale of
pharmaceutical company Aptalis Holdings Inc, announced earlier
this month, will increase its appeal to skeptical investors.
"We had an extraordinary exit year, and we expect another
one," Coulter said, pointing to some initial public offerings of
companies that TPG was planning.
The Oregon Investment Council also approved a $250 million
investment in a TPG credit investment fund. Like Blackstone
Group LP, KKR & Co LP and other peers, TPG has
diversified beyond private equity, prompting speculation that
TPG may one day seek to go public.
"We have no short-term desire to go public, but we will see
what happens. There are advantages and disadvantages," Bonderman