TPG boosts fundraising ambitions for next flagship pool

TPG Capital is raising its ambitions for its ninth flagship fund, targeting between $14 billion and $15 billion for the pool, according to sources and public pension documents.

Along with the flagship, the firm also will be raising its second healthcare-focused fund, which would likely bring the total raised to more than $15 billion, according to a person with knowledge of the firm.

TPG is one of several large managers crowding the private equity fundraising market with chunky targets. Limited partners have had a friendly reception to established managers raising more capital, and at a quicker pace, than ever before.

Some industry professionals are questioning whether uncertainty in the public markets and geopolitical crises will cause fundraising to slow down from its frenetic pace of the last few years.

TPG opened a data room on Fund IX earlier this year. Minnesota State Investment Board at its February meeting recommended a commitment of $100 million to the ninth fund. It’s not clear how much the firm is targeting for the second healthcare fund.

A TPG spokesperson declined to comment on fundraising targets.

TPG in 2019 closed its eighth flagship fund on about $11.5 billion and its debut healthcare-focused fund on about $2.7 billion.

Fund IX is expected to follow the firm’s strategy of investments in business services and industrials, consumer and retail, energy, healthcare, internet and digital media, software and enterprise tech. The healthcare fund invests alongside the main fund.

TPG Capital, which oversees the flagship and healthcare funds, is led by president Todd Sisitsky, who is co-managing partner of TPG Capital and the healthcare fund. He lead TPG Capital along with Jeff Rhodes, who also co-heads the healthcare fund, and TPG Capital co-managing partner Nehal Raj. They lead a team of 118 professionals, including 77 investment professionals, 36 operating professionals and five non-investment personnel.

Fund VIII was generating a 1.4x net multiple and a 55 percent net internal rate of return, as of September 30, 2021, according to information from Minnesota. Fund VII, which closed on $10.5 billion in 2016, was producing a 2x net multiple and a 21 percent net IRR, Minnesota said.

The healthcare fund was generating a 1.8x net multiple and an 84 percent net IRR, according to the Minnesota report.

TPG joins a crowded field of GPs of mega-funds seeking capital from LPs. Other big pools seeking capital this year include Blackstone Group, Advent International, Thoma Bravo, Vista Equity, Carlyle Group, Apollo Global Management and possibly Hellman & Friedman, which is talking about launching its next flagship pool later this year, or early next year, Buyouts previously reported.

Last year, fundraising tipped the scales with nearly $475 billion raised by 854 buyout, growth, venture and other PE vehicles, according to Buyouts‘ data. That was a 19 percent increase from 2020, and the highest tally except for 2019.