TPG to cut size of flagship funds amid tough fundraising environment

TPG is reducing the size of its flagship funds in the market to a combined target of $23 billion or $24 billion from a combined $27.5 billion, said Jack Weingart, chief financial officer, during TPG's first-quarter earnings call Monday.

Funds are taking longer to close, and "we believe near-term fundraising will remain difficult for the industry, CEO Jon Winkelried said on the same call.

TPG reported $137.1 billion in assets under management as of March 31, up 1.6% from three months earlier and an 13.9% increase from a year earlier. TPG executives said the increase was primarily due to fundraising of $2 billion in the first quarter and $26.6 billion in the year ended March 31. Capital raised during the year included $9.3 billion for TPG Partners IX, $3.4 billion for TPG Asia VIII and $2.5 billion for TPG Real Estate Partners IV, which closed at its $6.8 billion hard cap in October.

"We set our original flagship fundraising targets under different market conditions," Mr. Weingart said. "We still expect each fund to grow compared to its predecessor."

TPG funds currently in the market include TPG Healthcare Partners II and TPG Rise Fund III, in addition to TPG Partners IX and TPG Asia VIII.

TPG's investment activity was also slow, deploying $2 billion in the first quarter and $14 billion in the 12-month period ended March 31. TPG had $42.7 billion in dry powder at the end of the first quarter.

TPG reported $2.3 billion in exits in the first quarter, down from $4.8 billion in the year-earlier quarter.

"Given the long-dated nature of our capital, we will be very targeted and deliberate around monetizing investments during this part of the cycle," Mr. Winkelried said.

During the call, TPG also announced its pending acquisition of credit and real estate manager Angelo Gordon, an equity and cash transaction valued at about $2.7 billion that is expected to close in the fourth quarter.

"We continue to feel very good about our long-term growth trajectory, particularly with the addition of Angelo Gordon," Mr. Winkelried said.

Angelo Gordon is early in the process of creating structures to allow it to be constantly fundraising, Mr. Weingart said during the call in response to an analyst's question. But, he added, "that's one of the real growth opportunities for us together.