Private equity firm TPG valued at over $10 billion in strong market debut

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Jan 13 (Reuters) – Shares of TPG (TPG.O) rose nearly 12% in their stock market debut on Thursday, valuing the 30-year-old private equity firm at more than $10 billion, after the company went public to capitalize on a pandemic-induced boost to buyout industry profits.

TPG will seek to expand its franchise into other areas such as credit and infrastructure, chief executive Jon Winkelried told Reuters in an interview.

“We will continue to build on the business as we have in the past – growing organically, seeing opportunities and building on them,” he said.

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TPG’s public debut comes a decade after most of its major peers went public. The firm has spent years recovering from a series of lackluster investments in the 2000s and diversifying its private equity platform into growth and social impact investing.

The buyout giant expects to continue generating its target returns despite the prospect of interest rate hikes by the U.S. Federal Reserve this year, which could lead to choppy markets and lower valuations, the co-founder Jim Coulter.

“Our experience has been that if you pick the right company in the right industries, it will thrive through the market disruptions you see at times like these,” he said.

A screen advertises the listing of private equity firm TPG, during the initial public offering at the Nasdaq market site in Times Square in New York, U.S., January 13, 2022. REUTERS/Brendan McDermid

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NAVIGATING IN ROUGH WATERS

TPG has nearly $109 billion in assets under management, with investments in a variety of industries including companies such as Airbnb Inc (ABNB.O), Spotify Technology SA (SPOT.N), Burger King and McAfee Corp ( MCFE.O).

Founded in 1992 by David Bonderman and Coulter, TPG started as Texas Pacific Group in Mill Valley, California. Its first major investment was in the then bankrupt Continental Airlines in 1993. Known for its leveraged buyouts, TPG has invested in everything from retail to healthcare.

TPG’s net profit more than quintupled to $1.7 billion for the nine months ended September 2021. Its revenue jumped to $3.89 billion from $564.4 million a year earlier, driven by revenue growth from asset sales across its portfolio.

Shares of the Fort Worth, Texas-based company opened at $33. TPG and its selling shareholders sold 33.9 million shares at a price of $29.50 each, the midpoint of its target price range of $28 and $31 each announced earlier, raising about $1 billion.

The company’s decision to go public comes amid a recent stock sell-off. Three other IPOs, including that of clothing chain operator Authentic Brands and TypTap Insurance Group, have been canceled since the start of the year as investor concerns over soaring inflation and rising interest rates fueling market volatility.

JP Morgan, Goldman Sachs, Morgan Stanley, TPG Capital BD LLC and BofA Securities are the main underwriters of the offer.

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Reporting by Manya Saini and Sohini Podder in Bengaluru and Chibuike Oguh in New York; Editing by Shailesh Kuber and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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