Jon Winkelried, CEO of alternative asset manager TPG, said in his firm’s first-quarter earnings call that the planned acquisition of Peppertree Capital Management is a compelling strategic fit in part because of strong secular growth in the wireless communications sector.
TPG said in a news release it will acquire the digital infrastructure investment firm, which focuses on wireless communications towers, for up to $242 million in cash and $418 million in equity, payable at closing of the deal, which has been approved by TPG’s board of directors and is set to close in the third quarter. The agreement also includes earnouts based on future performance by Peppertree valued at up to $300 million.
Winkelried said in his firm’s May 7 earnings call that Peppertree is the “largest pure-play wireless tower specialist in the United States. With over 8,800 towers in its portfolio, Peppertree has raised 10 funds to date.”
Peppertree has $7.7 billion in assets under management. Co-Presidents Howard Mandel and Ryan Lepene will continue to lead Peppertree’s investment strategy with support from TPG, as well as Peppertree’s team of investment and operational professionals.
“We believe Peppertree is a compelling strategic fit for several reasons. First, Peppertree’s strategy is highly complementary to TPG’s existing investment leadership in the communication sector, and will benefit from our scale, deep thematic expertise and long track record of successfully scaling high quality businesses in the space,” Winkelried said.
“Second, the wireless communication sector benefits from strong secular growth as global demand for data continues to accelerate. As an industry leader, Peppertree provides us immediate scale in the tower and network infrastructure development space. Looking ahead, we believe there are significant opportunities to expand our investment capabilities across digital infrastructure," said Winkelried. "Third, Peppertree’s long-dated portfolio of uncorrelated assets generates contractually recurring, highly predictable cash flows, and we believe these attributes will resonate with our client base."
In TPG’s previous earnings call Feb. 11, Winkelried said TPG executives are aiming to double the firm’s assets under management to $500 billion “over the next several years,” possibly in less than five years.
While he said at the time that TPG expects to grow its AUM organically by launching new businesses and investment strategies such as the climate transition infrastructure fund that it launched in the fourth quarter, they were also on the lookout to buy another money manager.
TPG reported $250.6 billion in assets under management as of March 31, up 1.9% from three months earlier and up 12.1% from March 31, 2024. The rise in AUM during the first quarter was attributed to $5.9 billion in capital raised and $3.7 billion in investment performance, partially offset by $4.3 billion in realizations and $508 million in outflows.
