TPG Rise Fund 3 closes at $2.7bn – just below $3bn target

TPG has closed its third Rise Fund, its generalist private equity impact strategy, at $2.7 billion, narrowly missing its $3 billion target. Meanwhile, two Rise Climate private equity and infrastructure funds are slated for launch in the coming months, chief financial officer Jack Weingart said on the firm’s Q3 results call today.

The Rise Fund III, an Article 9 growth equity and buyout fund, was launched in March 2022 and at $2.7 billion is 24 percent larger than its $2.17 billion predecessor, Weingart noted. It closed “over the weekend,” said Weingart.

Known LPs in Rise III include the Washington State Investment Board, which committed $250 million (and has invested in Rise I, Rise II and Rise Climate I), asset manager Reach Alternative Investments, the King Baudouin Foundation and Daido Life Insurance.

The Rise Climate business has been busy: TPG Rise Climate I, which closed in 2022 at $7 billion, is “approximately 65 percent invested and committed,” Weingart said. TPG is “actively working towards launching” Rise Climate II, and is “making solid progress… on the launch of our inaugural climate transition infrastructure fund. We’re seeing strong interest from anchor LPs… We expect to be in the market in the first half of 2024.”

Rise’s climate private equity and infrastructure funds should be seen as “joined at the hip,” TPG chief executive Jon Winkelreid said. “On the infrastructure side, as climate technologies continue to evolve in a fairly rapid way, the cost of capital required to form these buildouts of different parts of the industry are quite large, so we’re seeing infrastructure capital move in a fairly aggressive way. But what we’re finding is that the relationship between the private equity pool of capital and the infrastructure pool of capital provides a flexibility and puts us in a position to create solutions for different companies and different partners.”

LP interest

TPG does not expect its climate fundraising to be impacted by sluggish fundraising trends in private markets over the past year. “While it may be the case that any one LP is more capital-constrained than they were two or three years ago… as we embark on this next wave of fundraising across climate more generally,” the number of LPs interested in climate has “increased significantly,” said Weingart. “Since the first Rise Climate fund we raised two or three years ago, and certainly since the first Rise fund we raised six or seven years ago, the awareness among our LP base of the investment opportunity and the capital needed in these areas has expanded significantly.”

“LPs view this as a hard-to-navigate part of the market,” Winkelreid added. “Some look at this as a piece of a private equity strategy. Some have an innovation pool of capital and they’re starting their allocation of capital from the innovation pool and then ultimately will mainstream it into their private equity allocations. [Climate] is too important an area for most large pools of capital to ignore. We’re seeing really strong engagement.”