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TPG set to revive CAA single-asset process that stalled in covid-battered markets

The process fell apart once the pandemic broke out and markets shut, which had an impact on CAA’s business with live events and entertainment production delayed and canceled.

In early 2020, TPG was proceeding through a deal to move its portfolio company Creative Artists Agency out of an older fund and into a continuation vehicle, attracting big-name investors like Goldman Sachs into the deal.

But the process fell apart once the pandemic broke out and markets shut, which had an impact on CAA’s business with live events and entertainment production delayed and canceled. The initial valuations used to price the deal would have to be re-examined at some other date.

Now, TPG is re-exploring the process, sources told Buyouts. It’s not clear if the deal is live in the market or if TPG is only talking to investors who were involved in the original process.

Initially, Goldman Sachs was set to lead the investor group in the deal, which also included Neuberger Berman, Buyouts reported at the time. Goldman has agreed to again lead the deal, a source said, while other potential investors are considering engaging in the new process.

Because work was done assessing the company, the likelihood is the deal could be re-negotiated and sealed up fairly quickly, another of the sources, a buyer in the secondaries market, told Buyouts. “Anyone who had a position before, and did due diligence, has an advantage,” the buyer said.

This is more of a financial updating of the deal now that markets have reopened: “Let’s renegotiate the deal off of the new numbers,” the source said.

The CAA process originally was expected to total more than $1 billion, Buyouts reported at the time. It’s not clear if or how that total will change. Initially, investors in the 2008-vintage TPG Partners VI would have the option to cash out of their exposure to the deal, or roll their interests with the GP into the continuation fund.

CAA, formed in 1975, has represented heavy-hitting celebrities and sports stars including Beyoncé, George Clooney and Derek Jeter. TPG first invested in CAA in 2010, and boosted its stake above a majority hold in 2014.

TPG Partners VI raised $18.87 billion against a target of $18 billion by final close in 2008, according to PEI data. Investors who backed the fund include the California Public Employees’ Retirement System, which committed $825 million, Canada Pension Plan Investment Board, which committed $750 million and New Jersey Division of Investment, which committed $360 million.

The fund was generating a net internal rate of return of 9.7 percent and a 1.5x multiple as of March 31, according to performance information from California Public Employees’ Retirement System.

This is at least the third GP-led process TPG has embarked upon. In late 2018, limited partners in the 2008-vintage TPG Asia V and the 2013-vintage TPG Asia VI were given the option to sell their stakes to a syndicate of buyers led by Lexington Partners, Buyouts reported.

In July, Secondaries Investor reported that CPPIB was set to back a tender offer on TPG’s second growth fund.

A TPG spokesperson declined to comment.

Single-asset deals accounted for 30 percent of GP-led transactions in the first half, up from 20 percent in 2019, according to a first-half secondaries volume report from Evercore. GP-led deals were about 39 percent of an estimated $18 billion total deal volume in the first half, Evercore found.