TPG Capital

No, TPG isn't going public any time soon

February 25, 2014: 2:10 PM ET

David Bonderman says that his firm is "contemplating" an IPO. It isn't news, and it isn't happening.

131112115757-david-bonderman-620xa

TPG Capital co-founder David Bonderman

FORTUNE -- There are a number of reports today about how TPG Capital is considering an IPO, in a move that would see the private equity giant join other publicly-traded firms like The Blackstone Group (BX), The Carlyle Group (CG) and Kohlberg Kravis Roberts & Co. (KKR).

Don't hold your breath.

At issue here are comments made this morning by TPG co-founder David Bonderman, as part of a keynote speech at the SuperReturn International conference in Berlin. He said: ""At the end of the day, everybody will go public. That will happen in our industry as well. For ourselves, 'contemplating' is the right word. We're thinking about it. But not too hard."

What's important to realize is that Bonderman and other TPG executives have been saying the exact same thing for years. In fact, I heard Bonderman's partner, Jim Coulte, say virtually the exact same thing at this conference two years ago.

More importantly, TPG is currently in a lousy position to go public. The firm's two most recent flagship private equity funds have struggled mightily, due in part to disastrous deals like Energy Future Holdings and Washington Mutual. According to The Washington State Investment Board, TPG's fifth fund had an internal rate of return of just 1.18% through the end of last September, compared to an industry benchmark of 7.68%. Its sixth fund had a 9.14% IRR, compared to a 12.32% benchmark.

The situation is so tenuous that TPG recently postponed raising its next flagship private equity fund, instead opting for a $2 billion "bridge fund" from some of its most loyal investors. How (or why) would TPG go public before sorting out the troubles with its core business?

It also is worth stressing that TPG is significantly smaller and less diversified than its listed rivals. Take a look at each firm's most recently-reported assets under management:

  • Blackstone: $266 billion
  • Carlyle: $188 billion
  • KKR: $94.3 billion
  • TPG: $55.7 billion

In other words, TPG manages around 41% less money than KKR and a whopping 79% less than Blackstone. Moreover, TPG doesn't have a corporate advisory practice, capital markets group, fund-of-funds group, secondaries group, fund placement group or direct real estate practice. Yes, it has a large hedge fund and credit business that diversifies its exposure beyond private equity, but nowhere close to what the aforementioned firms feature

If I were going to place a wager, it would be that no other U.S. private equity firm goes public in the next several years. TPG would probably make the most sense to take the plunge, and that basically makes the entire prospect nonsensical.

Sign up for Dan Primack's daily email newsletter on deals and deal-makers: GetTermSheet.com

  • The death of private equity's largest deal

    The largest buyout in history is on the brink of bankruptcy. Blame private equity, but be sure it's for the right mistake.

    FORTUNE -- The Wall Street Journal is reporting that Texas electricity giant Energy Future Holdings is preparing to file for bankruptcy protection, after failing to successfully restructure its $41.6 billion of debt.

    This will clearly be the largest private equity failure of all time. I say "clearly" because Energy Future MORE

    - Feb 21, 2014 11:31 AM ET
  • Bonderman: TPG may eventually go public

    David Bonderman isn't in a hurry, but he also isn't slamming the IPO door shut.

    FORTUNE -- TPG Capital is the largest private equity firm in America that isn't publicly traded, with more than $55 billion in capital under management. And that isn't expected to change any time soon, although TPG boss David Bonderman today nudged the door open a crack, while speaking at the NY Times Dealbook Conference.

    "We haven't been MORE

    - Nov 12, 2013 12:47 PM ET
  • More details on Uber's massive funding round

    Some details beyond the dollars.

    FORTUNE -- Last month we reported that Uber was in talks with Google Ventures and TPG Capital for a massive fundraise that would value the company well north of $3 billion.

    AllThingsD got the goods yesterday afternoon via a Delaware filing, which showed that Uber raised a total of $361 million at a $3.4 billion pre-money valuation. Fortune followed late last night with a scoop about how that Uber's two new board members will MORE

    - Aug 23, 2013 12:32 PM ET
  • Exclusive: TPG buys half of CCC Information Services

    Private equity firm quietly partners on half-billion dollar deal.

    FORTUNE -- Private equity firm Leonard Green announced in January that it had paid more than $500 million to acquire CCC Information Services, a Chicago-based provider of software and workflow tools to the automotive insurance claims and collision repair markets.

    What Leonard Green didn't announce, however, was that it then planned to sell around 50% of its interest in CCC to TPG Capital.

    Fortune MORE

    - Jun 12, 2013 11:32 AM ET
  • Can private equity solve Dell's dilemma?

    If Michael Dell keeps control, what is the point of going private?

    FORTUNE -- Details continue to leak about a possible leveraged buyout of Dell Inc. (DELL), the once high-flying computer maker that has fallen on hard times.

    Initial reports late Monday were that private equity firms Silver Lake Partners and TPG Capital both were in talks with Dell, but Fortune has learned from multiple sources that each firm was working independently MORE

    - Jan 16, 2013 6:39 AM ET
  • TPG faces a major fundraising challenge

    TPG Capital wants to raise a new fund late next year. Can a strong reputation overwhelm middling performance?

    FORTUNE -- TPG Capital is one of the world's most storied private equity firms, dating back to its 1993 turnaround of Continental Airlines. It raised $17.8 billion for its last flagship private equity fund in 2010, and firm co-founder David Bonderman recently threw himself a blowout 70th birthday party in Las Vegas with MORE

    - Nov 30, 2012 10:13 AM ET
  • Eric Leathers joins TPG

    Private equity investor Eric Leathers has quietly joined TPG Capital, Fortune has learned.

    Leathers previously was with Pine Brook Partners, where he spent more than two years as a managing director focused on financial services companies. At last check, he sat on the boards of Pine Brook portfolio companies Aurigen Capital Ltd., Green Bancorp Inc., and Narragansett Bay Insurance Co.

    Prior to joining Pine Brook, Leathers was a partner for more than a decade MORE

    - Feb 21, 2012 10:24 AM ET
  • Did private equity "bleed out" creditors?

    I don't like dividend recapitalizations. No, that's too mild. I despise them.

    From my (apparently) naïve perspective, private equity firms should buy a company, help grow it and then sell it. Returns should come from the difference between purchase price and sale price, not by adding even more debt onto a company for the primary purpose of enriching shareholders. It's greed masquerading as risk management, and undercuts valid PE industry arguments MORE

    - Dec 7, 2011 11:12 AM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.