TPG closes latest flagship buyout, healthcare funds at $15.6bn

TPG wrapped up its ninth flagship private equity and second healthcare funds, a few billion shy of their combined target.

TPG Partners IX and TPG Healthcare Partners II, raised in tandem, secured $15.6 billion of capital in a final close in the fourth quarter, CEO Jon Winkelried said in a year-end earnings call. Separately, the flagship raised $12 billion, while the healthcare vehicle took $3.6 billion.

Launched in 2022, the two funds finished 16 percent below their aggregate target of $18.5 billion. The shortfall owed to the flagship, which was seeking $15 billion. The affiliated healthcare pool instead came in slightly above its $3.5 billion goal.

Both funds, however, topped their 2019-vintage predecessors, perhaps in part because of initial returns. TPG Partners IX was earning a 39 percent net IRR as of December, and TPG Healthcare Partners II, an 85 percent net IRR, the firm reported.

In raising less than planned for its new flagship buyout fund, TPG joins several large-cap peers, among them Apollo Global Management and Carlyle. Blackstone also recently dialed back on expectations for a ninth corporate private equity offering, which remains open.

In each case, a key factor was a slower market. In 2023, $559 billion was raised by North American private equity funds, down 9 percent from a year earlier, according to Buyouts data. Fund closings, totaling 1,208 last year, declined 17 percent.

Winkelried made this point in the earnings call, describing the close of TPG Partners IX and other vehicles as “a significant accomplishment, given the persistent industry headwinds in private equity fundraising.”

These headwinds got in the way of TPG Partners IX and TPG Healthcare Partners II, which had managed to secure 57 percent of their combined target as early as the third quarter of 2022. Thereafter, capital raising was much more tepid, causing the firm to revise its forecast.

The two funds are part of TPG’s $71 billion capital platform, focused on large-scale, control-oriented investing in select sectors. Their closes contributed to total inflows of $8.8 billion in the fourth quarter and $15.7 billion for the year.

Also in the fourth quarter, TPG completed its $2.7 billion acquisition of private credit and real estate shop Angelo Gordon, helping to increase AUM to $222 billion. The deal, along with “organic innovation,” have “substantially expanded the breadth of our franchise,” Winkelried said.

“As a result,” he said, “the cadence and consistency of our capital raising and overall growth profile have fundamentally changed. We’ll be in the market on a steadier, more consistent basis across both the institutional and private wealth channels.”

TPG’s growth in 2024 will be driven by “five primary vectors,” he said. They include broad-based credit fundraising, new growth and Rise Climate funds, rollout of a climate infrastructure strategy, and completion of first-time vehicles, such as real estate credit and GP secondaries.