‘It’s too early to tell’ if flagship targets will be met: TPG’s Weingart

TPG is hedging its bets about meeting targets for an array of flagship funds, as market challenges are expected to persist or worsen in 2023.

“It’s too early to tell whether we’ll hit all those targets or not,” CFO Jack Weingart said in answer to a question in TPG’s year-end earnings call. He added that no targets have as yet been adjusted.

“Fundraising always has kind of a natural arc to it and oftentimes after a large first close, like we’ve had in all these funds, you tend to see a bit of a backloading to the remainder of the campaign,” he said. “I think that’s always true. It’s even more true in today’s fundraising environment.”

With LP demand for TPG offerings staying “strong,” Weingart said, the firm nonetheless believes it can “successfully complete” capital raising for key flagships this year. They include the latest flagship buyout offering, TPG Partners IX, and an affiliated healthcare pool, TPG Healthcare Partners II, which together are seeking $18.5 billion.

“I’d expect Q1 to be relatively light, but with a good acceleration in Q2 and Q3,” he said.

In a market plagued by supply shortages, TPG is among a number of GPs who appear to be rethinking fund sizes. Often part and parcel of accelerated fundraising, step-ups in targets are commonplace in private equity. Due to cash constraints, however, LPs are now pushing back on ticket sizes and recommending trims.

This seems to have led to more careful GP prognostications about the results of fundraising.

Blackstone, for example, has declined to publish the target for its buyout flagship, Blackstone Capital Partners IX, which Buyouts reported may be seeking as much as $28 billion. It has instead said the vehicle is likely to be “at least as large as the prior fund,” closed in 2019 at $26.2 billion.

Despite the cautionary language around flagship outcomes in 2023, TPG wound-up last year with solid numbers. Capital raised totaled $30 billion, up 46 percent from the more than $20 billion secured in 2021.

This growth partly owes, as Weingart noted, to the substantial initial closes of flagships. Prominent among them were TPG Partners IX and TPG Healthcare Partners II, which collected $8.9 billion and $1.9 billion, respectively, or 58 percent of the combined target.

Rise Fund III, TPG’s new impact offering, had even more momentum in 2022, bringing in $2 billion-plus or more than two-thirds of its $3 billion target.

Another fund, TPG Tech Adjacencies II, also finished the year only a few million shy of its $3 billion target. The vehicle, a provider of flexible capital solutions to tech companies, has attractive opportunities ahead, CEO Jon Winkelried said in the earnings call, because of the “recent tech slowdown.”

Along with completing existing fundraising campaigns, TPG’s focus this year will be on expanding into “adjacent strategies where we believe we have unique competitive advantages,” such as climate infrastructure and real estate credit, Winkelried said. It will also continue to “scale our GP-led secondaries effort.”

Offerings set to launch this year include the firm’s latest growth equity flagship, TPG Growth VI, the predecessor for which closed in 2021 at $3.6 billion.

Assets managed by TPG totaled $135 billion at the end of December, up 19 percent year over year.