TPG takes majority stake in NewQuest

The initial transaction – TPG is said to have bought one-third of NewQuest, with NewQuest receiving shares in TPG – represented the global GP’s first foray into secondaries globally. It was positioned as a largely passive balance sheet investment: NewQuest continued to operate independently; TPG had no plans to build its own secondaries capability in Asia; and co-investment was seen as unlikely.

For NewQuest, it was about finding a partner to help the firm scale. It had already rolled out fund restructurings alongside its existing direct secondaries offering and there was a desire to target additional sub-specialties. Fundraising support was another factor. NewQuest closed its fourth fund at $1 billion in late 2019, up from $540 million in the previous vintage.

TPG moving into a majority ownership position is described a further alignment of the two organizations with a view to plugging NewQuest into a global platform, according to a statement. TPG recently established a secondaries business in the US and Europe, recruiting Michael Woolhouse from Canada Pension Plan Investment Board (CPPIB) to lead it.

Darren Massara and NewQuest’s existing leadership team will maintain oversight of the business and its investment process, including the strategy for existing funds.

“Secondaries have become an increasingly important part of our ecosystem over the past 10 years, and our partnership with Darren and the NewQuest team has provided us with unique exposure and insight into this fast-growing and evolving market,” said Jon Winkelried, co-CEO of TPG. “Today’s announcement marks the next step in our evolution and will allow us to establish a differentiated, global platform.”

NewQuest was created in 2011 through a spin-out of Bank of America Merrill Lynch’s (BAML) Asia PE team. A debut fund of $400 million was primarily used to acquire 21 private equity positions from BAML. A second fund of $316 million was raised in 2014, with Fund III closing two years later.

The firm’s direct secondaries strategy involves acquiring single assets and multi-asset portfolios from investors that may be changing strategy, leaving a geographical market or returning capital to LPs to support a new fundraising process. It has also introduced a fund solutions strategy, where NewQuest acquires a significant LP interest in a fund and collaborates with the incumbent GP on top of a restructuring or spin-out.

NewQuest has $2.4 billion in committed capital and operates out of offices in Singapore, Hong Kong, Beijing, and Mumbai.

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• Topics
• Secondaries
• Secondaries
• GPs
• Asia
• NewQuest Capital Partners
• TPG Capital
• Secondaries