Alternative Asset Management Firm TPG Launches IPO

Global alternative asset management firm TPG is going public through an initial public offering (IPO) that includes 33.9 million shares of class A common stock priced at $29.50 per share. The shares will begin trading on Nasdaq under the symbol TPG on Jan. 13, 2022, and the offering is expected to close on Jan. 18, 2022.

Among the better known companies in TPG's portfolio are Airbnb, Inc. (ABNB), gym operator Crunch, commercial real estate company Cushman & Wakefield PLC (CWK), DirecTV, software provider McAfee Corp. (MCFE), Indian conglomerate Tata, and Viking Cruises. Tata is the parent of Tata Motors Ltd. (TTM), which owns the Jaguar and Land Rover brands. Among the more notable realized investments of TPG was Burger King, currently owned by Restaurant Brands International Inc. (QSR).

About TPG

TPG was founded in 1992, with its first office in San Francisco, by Jim Coulter and David Bonderman, former colleagues at the Bass Family Office. The firm reports having about $109 billion in assets under management (AUM). Its current CEO is Jon Winkelried.

TPG currently has investment and operational teams in 12 offices globally. The firm invests across five multi-product platforms: capital, growth, impact, real estate, and market solutions. It claims that its "unique strategy" is driven by collaboration, innovation, and inclusion.

Use of IPO Proceeds

Per its press release: "TPG intends to use approximately 40% of the net proceeds to purchase partnership interests in the TPG operating entity from other existing strategic investors, and the remaining net proceeds it receives to pay offering and reorganization expenses and for general corporate purposes, which may include facilitating the growth of TPG's existing business and/or expanding into complementary new lines of business or geographic markets. TPG will not receive any proceeds from the sale of shares by the existing strategic investor."

Strategic Rationale

The IPO, which is expected to raise $1 billion for TPG if all 33.9 million shares are sold at the offering price of $29.50, will give the company a $9 billion valuation. "They may have felt at a competitive disadvantage to public peers by not having a liquid currency of shares with which to pay executives, or to make acquisitions," observed a longtime private equity executive.

Moreover, as noted in the excerpt from the press release quoted above, part of the rationale for the IPO is to buy out minority stakes held by outside investors. TPG's leaders are not selling any of their holdings.

Broader Implications

TPG's listing is the first big stock market debut of 2022, and investment bankers should be watching its performance closely to monitor the health of the IPO business. Meanwhile, business software maker Justworks Inc. has postponed its own IPO, citing unfavorable market conditions.