Texas Pacific Group

Texas titans

Texas Pacific Group, also known as TPG, is truly one of the giants of private equity with approximately $45 billion of capital under management spread out among a family of funds.  TPG Growth is the firm's investment platform for the early stage and growth investments, while TPG Biotech covers science-based investments.  In early 2007, TPG officially renamed its buyout arm as TPG Capital.  Since it was founded in 1992, TPG has invested in companies of "change" that reflect the economic and industry trends of the moment.  This strategy has allowed this Texas-based firm to cash in on companies, such as Neiman Marcus, Lenovo Group and SunGard Data Systems before these companies hit their respective earnings peak.  TPG usually sets its eyes on businesses that require $10 million to $1 billion in equity capital.

Fund wars

The Blackstone Group, a leading global provider of financial advisory services, shocked the private equity world in 2007 with the announcement that it has raised a record $21.7 billion fund.  However, TPG has a multibillion dollar fund of its own in the works, which some industry insiders say may be poised to top Blackstone's benchmark.  TPG's original aim for its latest global fund was to raise $18 billion with a cap of $20 billion.  In June 2008, the firm had reportedly secured $15 billion to $16 billion from a wide range of investors, including Washington State Investment Board, two state investment boards, California Public Employees' Retirement System, Teacher Retirement System of Texas, two pension funds and Conversus Capital.  One of the firm's most widely discussed investments came from China's State Administration of Foreign Exchange, which contributed $2.5 billion in 2008, one of the biggest investments ever in a private equity fund.

Finding luck elsewhere

In 1994, TPG ventured into Asia, naming the Asian operation arm Newbridge Capital.  The arm was able to manage $3.2 billion during its peak, figuring in noteworthy transactions that included the purchase of Chinese-owned Shenzhen Development Bank, acquisition of Korea First Bank and a large deal with Indian pharmaceutical company Matrix Laboratories.  Newbridge Capital, which was renamed TPG Newbridge in 2007, also made dealings with Thailand's eighth largest bank, BankThai, to push it as a top player in the Thai banking industry.  TPG took an initial 33 percent stake in BankThai in April 2007 and increased it to 42 percent the following year.  TPG maintained its healthy business relations abroad by pursuing Australia's Asciano Limited for a deal that would amount to $2.7 billion and by purchasing 35 percent interest in P.T. Bumi Resources in Indonesia for $1.3 billion.

When the smoke cleared

TPG had to dig itself out from a huge hole after a botched venture with Washington Mutual in June 2008 wherein it saw its entire investment of approximately $2 billion go up in smoke.  The diminished value of its portfolio company Midwest Air Group Inc. which left TPG limping away didn't help either.  The recovery began to take shape when the firm was able to gain on the sale of its stake in China's Shenzhen Development Bank Co. Ltd. in July 2009.  Newbridge Capital placed what was then considered as a risky bet on the Chinese bank in 2004, but the bet was justified when it earned gains of almost 10 times what TPG paid for five years ago.  Apart from cashing in on its investments, TPG's other portfolio companies also did its part as Avaya Inc., co-owned with Silver Lake, bought Nortel Networks Corp.'s Enterprise Solutions division for $915 million in September 2009.

The effort to recuperate from the credit crisis and failed investments reached its pinnacle when TPG Capital's founder David Bonderman revealed in September 2009 that the firm owns about $60 billion in capital, half of which are uninvested and on the lookout for opportunities.  The $30 million that TPG is sitting on represented a bulk of the roughly $400 billion in uninvested capital that private equity firms are preserving.  Private equity firms spent three years of fundraising, which produced plenty of capital commitments when the credit crunch hit and deals did not materialize.



Texas Pacific Group


301 Commerce Street,
Suite 3300
Fort Worth, TX 76102
Phone: (817) 871-4000
Fax: (817) 871-4001
www.tpg.com

STATS


  • Employer Type: Private
  • Managing Partners: David Bonderman, Jim Coulter & Bill Price
  • 2006 Employees: 60

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