Global PE giant TPG hits $3.4b first close for new Asia fund

Global PE giant TPG hits $3.4b first close for new Asia fund

Photo by 金 运 on Unsplash

US-based alternative investment firm TPG has completed a $3.4-billion first close of its latest Asia fund, which targets a $6-billion corpus, the firm said during its Q3 2022 earnings call.

TPG Capital Asia VIII was launched earlier this year, three years after the firm raised $4.6 billion for its seventh Asia-focused buyout vehicle.

TPG said it has raised more than $8 billion in total during Q3 2022 and $29 billion over the last 12 months, including the fundraises for its flagship TPG Capital Partners fund as well as the Healthcare Partners and Rise strategies.

This has pushed up TPG’s assets under management by 24% year-on-year to $135 billion.

TPG Capital Asia VIII has already clocked its first investment in iNova Pharmaceuticals, an independent consumer healthcare and medicine products company in the Asia-Pacific.

“There remains to be strong interest in Asia (…) particularly [from] Europe and the Middle East,” said James Coutler, executive chairman and founding partner of TPG.

While US investors have weaker interest in this region due to political concerns, Coutler revealed that TPG has “always underweighted China and overweighted (…) the arc around China”.

“And we’re seeing a relative increase of interest in that strategy,” he added.

Asia’s attractiveness also stems from a pretty strong rebound post-COVID, outside of China, Coutler opined.

Among other strategies in Asia, TPG said it has secured the first close for its GP-led secondaries business, NewQuest Capital Partners. Combined with another first close for the same strategy in North America and Europe, the total capital raise stands at approximately $1 billion.

In July, DealStreetAsia reported that NewQuest was targeting $2 billion for its fifth Asia secondaries fund.

“Given the environment that we’re in and what’s happening in the secondary market, particularly as it relates to GP capital, (…) we think it’s a very large opportunity. GP solutions capital is the one area in our market where we see it being undercapitalised,” CEO Jon Winkelried said during the earnings call.

In terms of deployment, TPG still had what it called “a record $46 billion” dry powder at the end of the third quarter.

Even as market volatility has slowed down the firm’s investment pace, Winkelried saw “increasingly interesting opportunities to invest in high-quality companies”.

“We’re currently in an adjustment period where sellers’ valuation expectations are resetting lower, and transaction levels may remain softer for a while longer. (…) We are starting to see valuation expectations begin to align,” he said.

He added that TPG’s portfolio has been constructed by targeting businesses with high intellectual property and strong secular growth in sectors such as healthcare, technology, and climate, to weather the impacts of high inflation.

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