Firms & Funds

TPG credit team readies final close for TSSP Opportunities IV

-
TPG Sixth Street Partners, private equity, Pennsylvania PSERS, pension fund
TPG Sixth Street Partners logo courtesy of the firm.
  • TSSP Opportunities Partners IV targets $3 bln
  • Final close slated for June
  • Fund III netting 11.2 pct IRR as of Dec. 31

TPG’s credit arm is expected to hold a first and final close for its latest opportunistic credit fund in June, documents from Pennsylvania Public School Employees’ Retirement System show.

TSSP Opportunities Partners IV is targeting $3 billion to invest in opportunistic credit, special situations and distressed investments across the capital structure, typically targeting idiosyncratic assets that are undervalued, the Pennsylvania memos say.

Fund IV will take positions in 30 to 40 core investments, with the typical size ranging from $25 million to $200 million.

A majority of Fund IV’s investments will be in domestic assets, though as much as 40 percent of the vehicle could be used to take positions in companies operating out of developed markets like Europe, Australia, New Zealand, Canada and Japan.

The firm’s credit arm, TPG Sixth Street Partners, is expecting Fund IV’s investments to gross around 2x invested capital, according to Pennsylvania documents.

Pennsylvania PSERS is a longtime backer of the Sixth Street Partners team, which Goldman Sachs alum Alan Waxman launched in 2009. The retirement system committed $850 million to the platform since 2011, netting a 13.5 percent internal rate of return and a 1.32x multiple.

The system committed up to $150 million to Fund IV on May 24, pending final negotiation of fund terms.

The predecessor to Fund IV, raised in 2014, was netting an 11.2 percent IRR and 1.24x multiple as of Dec. 31, Pennsylvania documents say.

Fund II, a 2011 vintage, was netting a 16.4 percent IRR and 1.68x multiple as of that date.

Earlier this year, Buyouts reported that TPG Sixth Street Partners was raising more than $8 billion across three new vehicles, including Fund IV.

The largest vehicle is targeting $5.5 billion for investments that are adjacent to the platform’s core products in distressed debt, opportunistic credit and direct lending.

Last year, Dyal Capital Partners purchased a 10 percent stake in TSSP. The stake valued the investment platform at $3.5 billion, The Wall Street Journal reported.

The firm declined comment.

Action Item: To read Pennsylvania documents on TSSP IV, visit https://bitly.com/