Buyout firm TPG is heading toward a record year in fundraising, lifting its full-year target to more than $55 billion and building a roughly $86 billion arsenal of uncommitted investment capital even as higher interest rates and market volatility weigh on the broader private-equity industry.
The firm had targeted raising more than $50 billion this year across various strategies. On Thursday, TPG executives said they already had raised nearly $42 billion for the year through September and now expect the total to top $55 billion by year-end. That would mark an annual record for the firm.
"Our clients recognize the powerful secular trends of rising power demand, the re-industrialization of major economies, and the reshaping of global supply chains, which together are driving an unprecedented need for capital," Chief Executive Jon Winkelried said on the firm's third-quarter earnings call.
This year's fundraising results are expected to benefit from some accelerated fund closings that had been anticipated to occur next year, along with strong investor commitments to its climate strategies, with some $10.4 billion flowing into TPG Rise Climate II and the firm's Global South Initiative. In all, TPG raised more than $15 billion in the just-ended quarter, including $8.5 billion for its private-equity strategies.
Firm executives didn't give a fundraising target for next year -- saying only that its recent success suggests an "annual fundraising cadence" of around $45 billion to $60 billion. As an example of recent fundraising strength, they cited the firm's real estate strategy, which has had one of the firm's strongest starts in raising fresh capital. In the past week, TPG's opportunistic real estate strategy and related vehicles held a first close with around $5 billion.
Across its latest fundraising cycle, TPG's fund sizes increased by about 30% on average, Winkelried said. He added that the firm expects to double credit assets under management by the end of 2029.
The firm's third-quarter report offers a glimpse into how some fund managers are navigating market disruptions as elevated interest rates and geopolitical uncertainty pressure dealmaking.
"Certainly [higher rates] will have an impact on transactional activity, cost of capital," Winkelried said. But deal pipelines remain robust, he said. While TPG uses debt to finance deals, its core private-equity business isn't a "leverage arbitrage business," he said, referring to strategies that exploit temporary price or yield differences.
Overall, TPG invested about $11.5 billion in the September quarter, down about 23% compared with $14.9 billion in the year-ago period.
The firm's third-quarter realizations, or proceeds from investment sales, fell 15% to about $6.6 billion compared with the same period of last year. For the year through September, though, proceeds from asset sales rose 10% to $20.4 billion.
Larger rival Blackstone also saw third-quarter asset-sale proceeds plunge 34%, dragged down by a 49% drop in its private-equity division.
Winkelried echoed comments made on previous earnings calls that while higher rates, geopolitical uncertainty and technological advances around artificial intelligence are adding complexity -- and volatility -- such periods often create attractive investment opportunities.
For example, he said, demand for customized credit solutions is expanding, driven by the "higher-for-longer" interest rates and AI infrastructure financing requirements and compounded by a "wall of debt" borne by private-equity-backed companies that matures in coming years.
Since acquiring credit provider Angelo Gordon three years ago, TPG has transformed the operation into a primary growth engine for the firm. Credit saw its best quarter of the year with about $7.7 billion invested across strategies.
A closely watched performance measure, after-tax distributable earnings -- representing cash that can be returned to investors -- rose about 24% to $265 million, or 65 cents a share, compared with the year-earlier period. Fee-related earnings rose 43% to $321 million.
Net income rose about 48% to $99.6 million, or 41 cents a share, compared with a year earlier, while revenue held steady at about $1.22 billion, aided by higher management, monitoring and other fees. TPG ended the quarter with assets of nearly $346 billion, up about 21% from a year earlier.
The firm's Nasdaq-listed shares rose about 7.5% Thursday following the earnings report to close at $47.94.
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