GIC buys into second Western GP

GIC has reportedly teamed up with Kuwait Investment Authority to buy a 4.5% stake in David Bonderman-led TPG Capital. The sovereign fund bought a stake in Apax in 2009.

Global private equity heavyweight TPG Capital has reportedly agreed to sell a 4.5 percent stake in itself to Government of Singapore Investment Corporation (GIC) and Kuwait Investment Authority (KIA).

The transaction marks GIC’s second acquisition of a stake in a Western private equity firm. In February 2009, the Singaporean sovereign wealth fund partnered with Australia’s Future Fund and a third investor to buy a stake of around 10 percent in Apax Partners.

Both TPG and GIC declined to comment, while KIA could not immediately be reached.

According to a Wall Street Journal report, TPG sent a letter last Thursday night to its investors informing them of the transaction, without naming the purchasers. Sources told WSJ that the two sovereign wealth funds are to pay “several hundred million dollars” for the stake.

“Yesterday we completed a private sale of a small, passive minority economic stake in the consolidated general partner of TPG,” David Bonderman, TPG’s co-founder, reportedly said in the letter.

Although rivals have raised billions through public markets, Bonderman said, “we have chosen a private transaction as a path to provide capital to our firm.”

Other sovereign wealth funds that have bought directly into a private equity firm include China’s CIC, which owns stakes in London-headquartered Apax Partners and the publicly listed Blackstone Group; Abu Dhabi Investment Authority, which acquired a reported 9 percent stake in Apollo Global Management in 2007; and Abu Dhabi Government fund Mubadala, which bought a 7.5 percent interest for $1.35 billion in The Carlyle Group, also in 2007.

TPG has long been exploring options to secure a capital injection. In February 2009, the firm abandoned plans to sell a single digit stake in its management company, having been in talks with KIA, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS).

TPG may still follow its peers by going public in future a source told the WSJ, although no decision has been made.

Last week, Apollo raised $565.4 million through an initial public offering on the New York Stock Exchange (NYSE), selling 29.7 million shares at the high end of the pricing range of $17 to $19 per share.

Other private equity firms to go public include Blackstone, which was listed on the NYSE in 2007, and Kohlberg Kravis Roberts, which was listed in July last year. Carlyle, meanwhile, is reportedly looking at an IPO later this year.