Olympic Partners, a special situations fund sponsored by private equity firm TPG Capital, is losing its $2 billion investment in Washington Mutual Inc., following its failure on Thursday and subsequent purchase by JPMorgan Chase & Co., according to a source familiar with TPG funds.
Investors in Olympic Partners included at least three TPG funds, including TPG Capital IV and VI, which put in a total of $1.35 billion in capital, according to documents filed by TPG with the SEC.
The remaining $650 million came from institutional investors including possibly another private equity firm, said the source, who requested anonymity.
Current TPG limited partners were not among the co-investors in the Olympic Partners fund. TPG VI also made a separate $6 million investment in Washington Mutual.
Investors in the $19.8 billion TPG VI include the California Public Employees Retirement System, New York State Common Retirement Fund, Illinois Teachers Retirement System, Washington State Investment Board, Los Angeles City Employees Retirement System and the San Francisco City & County Retirement System.
The source familiar with TPG said the co-investors in Olympic Partners did not include limited partners in TPGs other funds. But TPGs filing with the SEC appears to contradict this: The purchase price was funded by equity contributions of the limited partners of Partners VI and Olympic Partners, respectively.
CalPERS committed $950 million to TPG Partners VI, which closed in February, said Clark McKinley, spokesman at the $223 billion system. He declined to say if CalPERS had also co-invested with TPG.
We dont comment on what's happening with portfolio companies, funds and external managers unless theres a compelling reason to do so as in the case of proxy campaigns, our focus list of underperformers, Mr. McKinley said.
Other investors could not be reached by press time.
Obviously, we are dissatisfied with the loss to our partners and ourselves from our investment in Washington Mutual, according to a TPG spokesman who declined to be identified. While the loss is extremely disappointing, we are well diversified across platforms, geographies and sectors, and this investment represented a very small portion of our assets.
Separately, Harris Associates Oakmark Funds lost big on Washington Mutual, according to sister publication Crains Chicago Business.
Three Oakmark Funds added nearly 12 million WaMu shares in the second quarter, boosting holdings 29% to 39.5 million. During the quarter, the shares which a year ago fetched $35.66 fell by more than half to $4.93, resulting in a loss to the three funds of at least $178 million. The shares lost all value today after government regulators seized the bank and sold it to JPMorgan Chase & Co.
A statement on Harris Associates website today says earlier this month we sold Washington Mutual in three funds managed by Bill Nygren. On June 30, WaMu shares accounted for about 4.86% of Oakmark Select Fund, 2.78% of Oakmark Global Select and 1.15% of Oakmark Fund, the company said. Together, the three funds manage $7 billion.
Our decision was influenced by both taxes and by the business value uncertainty created by the turmoil in the financial services sector, Mr. Nygren wrote in the note, which doesnt say whether all WaMu shares had been sold or at what price. Mr. Nygren didnt return a call, and another Harris executive declined to elaborate on the note.