FundFire: TPG Takes Long Route on $10B Fundraise
The Financial Times’ FundFire wrote “TPG Takes Long Route on $10B Fundraise” about TPG Capital’s ongoing efforts to raise TPG Partners VII (behind a paywall) on February 17, 2016.
“TPG Capital is nearing the finish line on its seventh buyout fund, but the jury is out on whether its 20-month journey to raise $10 billion – even as peers such as Blackstone Group and Warburg Pincus launched and closed funds in far less time – is a sign of difficulties, patience, or ill timing.”
FundFire detailed the competitive fundraising environment, noting the TPG is slower than its peers.
“A majority of managers today reach a final close within 18 months, with 40% of those hitting the mark in a year or less, according to Preqin data. Since TPG’s fund entered the market in July 2014, according to Preqin, other big buyout funds have come and gone, including Warburg’s 12th fund – which raised $12 billion from May to November last year – and Blackstone’s seventh fund, which raised $18 billion from November 2014 to December 2015.”
Several public pension funds that have historically been significant TPG investors have not made a commitment to Fund VII, FundFire reported.
FundFire noted that TPG’s fund performance may be impacting its fundraising.
“Its $17.4 billion fifth buyout fund has a net internal rate of return of 4.8%, and the $19 billion sixth fund has a 12.6% rate, according to data through the second quarter of last year from Palico, an online private equity marketplace. The sixth fund is somewhat off the mark for funds of similar size and vintage in a custom Palico benchmark, which puts the average top quartile fund’s rate of return for its peer class at 14.5%, though it is ahead of the benchmark’s average return of 11.6%.”
FundFire also suggested TPG’s potential IPO and succession plans for founder David Bonderman may be a factor.