TPG will begin trading on the Nasdaq on Thursday, after raising $1 billion in an IPO that values the private equity giant at about $9 billion.
Why this matters: It has taken more than a decade to make this day.
Flashback: In February 2012, I sat opposite TPG co-founder Jim Coulter in a Berlin hotel and questioned him about the firm going public. Peers like Blackstone and KKR already had trading shares, and the Carlyle Group was just months away from that.
- He was definitely non-controversial – tbh, reminds me of the Collison brothers of Stripe – talking about how the timing should be “right”.
from the macro market levelSurely today is not the right time. HR software unicorn JustWorks postponed its IPO set for the week due to market volatility, and a hike in interest rates may cause some traders to be extra cautious on PE firms that use leverage for some of their purchases.
Coulter and Top TPG Management, however, tell Nerdshala that the conditions are now fine for TPG:
First, because it executed successfully Its succession planning, co-founders David Bonderman and Coulter moving into new roles (non-executive chair and executive chairman, respectively), and the appointment of John Winkelrid as CEO and Todd Sisitzky as chairman. It also distributed equity to almost everyone inside the firm.
Second, because it is diverse Beyond its buying roots, particularly in areas such as impact and growth equity investments.
- In addition, it turned around A major private equity business that had some initial challenges.
Third, and perhaps most important, TPG has a chance to see its publicly listed peers.
- The most direct comp is likely Sweden-based EQT, which listed Stockholm in 2019 but still has a lot of shared DNA with US firms.
- The lag time lets TPG decide whether it prefers a lighter balance sheet (eg, Ares and Blackstone) to a heavier balance sheet (eg, Apollo and KKR). It also benefited from seeing other firms transition from publicly traded partnerships to C-corporations, making their shares eligible for most equity indexes and ETFs; Thus helps drive share prices. There has also been growth on valuation metrics (remember “net economic income?”).
- Finally, the rise of passive investing has made private equity more attractive to those who want to be exposed to active managers.
Deal Details: TPG priced 33.9 million shares at $29.50, the midpoint of its proposed range. The firm is also promising quarterly dividend.
Bottom-line: CVC Capital Partners is expected to be the next alt asset firm IPO, with bankers hitting up stores like Silver Lake, Warburg Pincus and (probably) Andreessen Horowitz as well.
Get smarter, faster when you go public with our free, 3-video short course.