TPG Heads for IPO as It Cashes In on Buyout Industry’s Boom
TPG is going public, eyeing to cash in on the boom that has helped buyout peers post bumper results & pay out record compensation.
(Bloomberg) -- TPG Inc. is going public, seeking to cash in on the boom that has helped buyout peers post bumper results and pay out record compensation.
The firm, an early investor in businesses such as Uber Technologies Inc. and Airbnb Inc., is now readying for its own share listing, likely unlocking billions of dollars for its founders and executives.
It’s an industry gold rush the likes of which are rarely seen at publicly traded companies. In recent weeks, TPG’s rivals announced pay packages and incentives for executives that may reach $1 billion per person. Profits are soaring, assets under management are at records, and a Bloomberg index of private-equity managers is up 72% in 2021.
“Strong demand for private capital’s excess returns drives fundraising across the alternatives categories, benefiting the largest managers the most,” said Paul Gulberg, senior banking analyst at Bloomberg Intelligence. “More assets drive stable fees and profits.”
TPG is one of the last big private equity firms to join the stock market. Founded as Texas Pacific Group in 1992 by Jim Coulter and David Bonderman, its willingness to take massive bets on unloved or risky companies has often paid off.
Much of Bonderman’s wealth -- $6.9 billion, according to the Bloomberg Billionaires Index -- is tied up in the estimated value of his TPG stakes. When the firm goes public, he and Coulter will more easily be able to sell their shares and cash out if they wish.
The firm, along with much of its industry, has been moving to a new generation of leadership. Many of the massive payouts recently at private equity firms have been to the new executives taking over from founders. The packages, in the form of stakes in their firm’s shares, are potentially worth billions.
At TPG, a group of longtime partners were appointed to new leadership positions, and Coulter stepped down from role as co-chief executive officer.
TPG had $109 billion of assets under management as of Sept. 30, according to a prospectus filed Thursday. The firm listed an offer size of $100 million, a placeholder amount that will likely change. Carlyle Group Inc., which manages about $293 billion, is currently valued at about $19 billion.
TPG, which also invests in real estate and hedge funds, has its own SPAC platform.
Compensation Risks
Compensation could take a hit after the firm goes public, TPG said in the prospectus.
The firm said it may not be able to provide its future senior professionals with equity interests to the same extent or with the same economic and tax consequences as before. It added that its profit margins could also be squeezed if it has to increase compensation to retain and recruit talent.
But executives at its competitors are being handed lucrative awards in their firm’s shares. Earlier this month, KKR announced new awards for its co-CEO’s potentially worth billions, following a revamp of pay at Apollo Global Management Inc. that gave its co-presidents a massive stock package.
JPMorgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley, TPG Capital and Bank of America Corp. are leading the share the offering.
TPG plans to list on the Nasdaq Global Select Market under the symbol TPG.
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