TPG reaches $6.5b first close on latest global fund

The first close for TPG Partners VII is said to include $2 billion in commitments for TPG Strategic Partners Interim Fund, a bridge vehicle raised last year from a small group of investors. Even if the hard cap is reached, the fund will be substantially smaller than its two predecessors from 2008 and 2006, which secured commitments of $19.8 billion and $15.4 billion, respectively. The investment period for Fund VI was extended by one year to February 2015.

There was some uncertainty about the prospects for Fund VI, given the high-profile failures of Energy Futures Holdings and Washington Mutual, as well as a perceived weakening in LP sentiment towards mega funds in favor of middle-market vehicles. However, TPG is understood to have modified its strategy, placing greater emphasis on smaller deals, often involving businesses that are complex or require transformation. The firm has also strengthened its real estate and special situations capabilities.

According to the California Public Employees' Retirement System (CalPERS), as of June 2014, Fund VI had delivered a multiple of 1.4x and a net IRR of 11.5%. Fund V was on a multiple of 1.2x and a net IRR or 3.5%. The two preceding vehicles - which were much smaller than Funds V and VI - are on course to more than double investors' money.

TPG closed its sixth Asia fund last May at $3.3 billion after more than two-and-a-half years in the market. It is smaller than its 2008 vintage predecessor, but it is estimated that co-investment by a handful of large LPs on top of the main fund corpus will take the available capital to $4.5 billion.

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• Topics
• Fundraising
• GPs
• Buyout
• TPG Capital
• Fundraising
• buyout