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

·2 min read

By Manya Saini and Chibuike Oguh

(Reuters) -TPG shares 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 cash in on a pandemic-driven boost to the buyout industry's profits.

TPG will be looking at expanding its franchise into other areas such as credit and infrastructure, Chief Executive Officer Jon Winkelried told Reuters in an interview.

"We will continue to build on the business in the way we have historically - organic growth, seeing opportunities and building into it," he said.

TPG's stock market debut comes a decade after most of its major peers went public. The firm spent years recovering from a string of poor investments in the 2000s and diversifying its private-equity platform into growth and social impact investing.

The buyout giant expects to continue generating its targeted returns notwithstanding the prospects of interest rate increases by the U.S. Federal Reserve this year, which could result in choppy markets and falling valuations, co-founder Jim Coulter told Reuters.

"Our experience has been that if you choose the right company in the right sectors, they will grow through the market perturbations that you see at times like these," he said.

NAVIGATING CHOPPY WATERS

TPG has nearly $109 billion in assets under management, with investments across a range of industries including in companies such as Airbnb Inc, Spotify Technology SA, Burger King, and McAfee Corp.

Founded in 1992 by David Bonderman and Coulter, TPG was launched 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 across sectors from retail to healthcare.

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

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

The firm's move to go public comes amid a recent sell-off in stocks. Three other IPOs, including that of apparel chain operator Authentic Brands and TypTap Insurance Group, have been canceled since the beginning of the year, as investor concerns about surging inflation and higher interest rates fueled market volatility.

J.P. Morgan, Goldman Sachs, Morgan Stanley, TPG Capital BD LLC and BofA Securities are the lead underwriters for the offering.

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

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