TPG’s next Wall Street debut was created over decades


At the National Hockey League’s Seattle Kraken home game in October this year, team co-owner and private equity vilionaire David Bonderman made a tribute video of his undergraduate footage at the University of Washington in the 1960s. I introduced it.

Kraken lost the game, but it was still the culmination of many years of hard work from 79-year-old Bonderman, for hundreds of millions of dollars. At the same time he founded the hockey team, he was working on a much larger deal for decades. make.

Investment banker this fall Document created Listed on TPG, a $ 190 billion buyout company co-founded by Bonderman in 1992 with his disciple Jim Coulter.

The long-awaited initial public offering, Announced at Securities Filing ThursdayMeans that TPG has followed in the footsteps of Blackstone, Apollo, KKR and Carlyle and helped shape the $ 4 trillion alternative asset industry in the 1990s and 2000s.

“”[TPG is one ] We are a pioneer of private equity and alongside companies such as KKR and Blackstone, “says veteran Buyout Billionaire, who is close to both Bonderman and Coulter. “They brought the foresight with complex turnarounds and carve-outs … Persistence of the company is a great legacy.”

Future IPOs are ready to become the largest and most prominent in the recent wave of private equity listings, the scale of which has not been seen for at least a decade. It’s time for the alternative asset industry to grow rapidly and public market valuations to skyrocket.

Jamie Oleksiak of Seattle Kraken, right, acting against Vancouver Canucks. David Bonderman is co-owner of Kraken © USA TODAY Sports

It also prepares the company for a future beyond Bonderman who can explain that success in the private equity industry is almost a coincidence.

By the time he founded the Texas-based TPG in 1992, Bonderman was nearly 50 years old and was eclectic, including a security guard working night shift at Seattle’s iconic Space Needle monument. I was already proud of the work life achieved in.

As a litigant, Bonderman will defeat the Securities and Exchange Commission of the US Supreme Court in 1983, making it a serious case of insider trading law. He also worked briefly as a civil rights lawyer in the Nixon administration.

When Texas oil company Robert Bass hired Bonderman to the deal team after learning his work on preserving historic landmarks, including blocking the dismantling of Manhattan’s Grand Central Terminal in 1978. , A big break in his business happened in 1982.

Bonderman and Coulter left the bus in 1992 to rescue Continental Airlines from bankruptcy. The transaction generated nearly $ 700 million in profits with an investment of only $ 64 million.

They founded TPG that year, making the industry’s largest acquisition in the mid-2000s, raising more than $ 34 billion in two buyout funds shortly before the 2008 global financial crisis and growing rapidly. ..

After the crisis, its listed rival Blackstone used financial debris to become a colossal statue with a higher market capitalization than Goldman Sachs.

However, TPG was private and its scope was more modest. It was squeezed by some disastrous bets, especially the acquisition of Texas utility TXU and the casino empire Caesars Entertainment. These transactions, each worth more than $ 25 billion, were brought to bankruptcy court.

In 2008, the company also funded the Washington Mutual Bank’s $ 1.35 billion bailout. This investment was wiped out within a few months. TPG will deploy more than $ 35 billion in cash raised on the eve of the financial crisis, but both funds earned less than 10% annually, according to the company’s IPO prospectus.

“TPG performance lags behind Apollo, Blackstone and KKR performance, especially during the critical period 2007-2012, when many large cap stocks. [buyout] Gustaboshwed, a professor of finance at New York University and a former private equity executive, said:

Today, TPG’s assets under management are much smaller than its former rival, Blackstone, now proud of nearly $ 700 billion. Still, it is highly regarded for its expertise in technology, healthcare and sustainable investment.

With San Francisco as the largest trading hub, the company has recorded significant investment wins in biotechnology while helping Airbnb, Spotify, Uber and more.

Now that TPG is preparing to go public, a new generation of insiders will have to try to close the gap with their bigger rivals. Blackstone’s market capitalization surged $ 70 billion to nearly $ 150 billion this year as investors entered the stock market during a period of great enthusiasm for buyout companies.

Harvard Business School professor John Lerner said there was “significant skepticism” when Blackstone and others listed, but “pessimism was unjustified.”

“You wouldn’t be surprised if it increased. [in the] The popularity of “public private equity”. .. .. In the next few years, “Lerner added.

The foundation for TPG’s public offering was laid during the financial crisis. At that time, TPG realized that investing in growth-oriented companies was driving revenue.

Nearly 20 years younger than Bonderman at the time, Coulter oversaw the day-to-day operations of TPG from San Francisco and relied on a group of professional deal makers who had played an important role within the company to focus on growth. Helped to relocate.

By 2014, Bonderman had become chairman of the company and Coulter had become its CEO, and they began to lay the foundation for listing. The following year, they hired former Goldman executive John Wayne as co-chief executive officer to keep Coulter less involved in day-to-day management.

Winkery was handed an equity award when he was hired, which is now fully vested. The deal, described in this week’s securities filing as a “Winkelried Pre-IPO deal,” reveals that the company plans to go public for at least seven years.

With Winkelried helping to oversee day-to-day operations, TPG began raising new capital in 2015, including a $ 10 billion buyout fund. Another set of funds was used to invest in fast-growing Asian markets.

After co-founder Bill McGlashan pleaded guilty, performance recovered, led by a collection of impact funds now directed by Coulter that focused on the sustainability of TPG, known as the Rise Platform. did University entrance fraud scandal nationwide..

According to IPO documents, TPG Rise currently holds $ 13 billion in assets after raising $ 6 billion in climate funds earlier this year, generating 20% ​​annual net income.

TPG’s growth equity, real estate and Asian investment expansion platforms were also strong, but not outstanding to industry insiders. In its prospectus, TPG states that it has achieved an annual total internal rate of return of 23% on buyout investments since its inception.

However, that calculation includes a huge return from the 1993 investment in Continental Airlines, a transaction that took place before the TPG was officially created.

May of this year TPG Appoints Winkelried as Only CEO Coulter served as executive chair and, a few months later, promoted a few long-standing partners. Some junior deal makers have also been promoted to inner circles.

Like its peers, TPG pays executives large amounts, with Bonderman and Coulter receiving at least $ 160 million in cash distributions in 2020 and 2021, respectively. Winkelried received $ 76 million in the same time frame.

TPG declined to comment on this article.

The company plans to move from a partnership structure to a regular company within five years, which will allow it to participate in the stock market index.

It is unclear if it will trade in multiples similar to Blackstone, Apollo and KKR. Diversified Avoid high incentive fees generated by leveraged buyouts if they are volatile.

Investors have assigned TPG’s larger rivals a multiple of high valuations as Bonderman’s company has shifted to more stable credit and real estate investments that it hasn’t done on a large scale.

Private Equity Billionaire said the TPG “did a great job of pivoting away from the early days.” .. .. “The success that drove the company’s performance in the first decade,” he said, noting that investors are not benefiting from attractive credit and insurance assets. “It’s very different from Blackstone and Apollo.”

Two months have passed since Bonderman, who was about to be in his eighties, was praised for his first home game on the hockey team. As his company debuts on Wall Street, he will turn to it again.

Additional Report by Kaye Wiggins in London

TPG’s next Wall Street debut was created over decades

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