TPG Is Raising New Fund Focused on Public Company Stakes

(Bloomberg) -- The Barbarians are back at the gates, only this time they say they want to help.

Private equity giant TPG is raising a fund to invest in public companies and will offer its experience to aid better decision making, according to people familiar with the matter.

The soon-to-be-announced Strategic Capital Fund will primarily focus on building minority positions in large companies, said the people, who asked not to be identified because the matter isn’t public. The fund will seek board seats and provide advice on addressing a range of corporate governance and environmental issues, they added.

While that may sound like an activist play, TPG’s new fund won’t write attack letters, launch proxy fights or agitate for management changes, the people said. Instead, it will mirror the sort of engaged, long-term investments made by Warren Buffett’s Berkshire Hathaway Inc., the people said. In recent years, Berkshire has specialized in providing equity to companies-- often those in need of acquisition capital -- in exchange for board representation and preferred stock.

The fund will be significant and typical investments will represent at least 5% of a company’s equity, the people said. It couldn’t be learned how much TPG is looking to raise.

A representative for TPG declined to comment.

The prospect of making minority bets on public companies, once rare in private equity, highlights just how much the industry has coalesced with traditional asset management. It also underscores the creative imperative for sponsors as they grapple with record amounts of stockpiled cash and lofty public market valuations.

Executives responsible for launching the new venture believe bringing TPG’s private equity skills into a public company boardroom will bolster decision-making, according to the people.

TPG, with offices in Fort Worth, Texas, and San Francisco, has been developing other lines of business, including special purpose acquisition vehicles and two social-impact funds. The firm, co-founded by Jim Coulter, raised almost $14 billion last year for its eighth flagship fund and a supplementary health-care pool.

To contact the reporter on this story: Ed Hammond in New York at ehammond12@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks

©2020 Bloomberg L.P.