Performance Watch: TPG Capital

The firm’s investments are skewed towards transformational and off-the-beaten path transactions, which have generated higher returns.

TPG Capital is targeting $11 billion for its eighth flagship fund, which will invest in North America and Europe-focused mid- to large-cap companies.

Since inception, the firm has invested about $57 billion in 196 investments, creating more than $33 billion of gains on fully realised deals, according to Minnesota State Investment Board documents.

TPG’s investments have skewed more towards “transformational” and “off-the-beaten path” transactions rather than traditional buyouts, according to a Minnesota staff document. Transformational transactions include investments that have the potential for improvement or transformative growth while the unconventional, off-the-beaten path transactions have an attractive risk/reward profile, according to the document.

As of December 2018, 45.4 percent of TPG’s capital was invested in off-the-beaten path transactions, 34 percent in transformational transactions and 20.4 percent in buyouts since inception in 1993.

The firm’s predecessor vehicle, the $10.5 billion TPG VII that closed in 2015, is 61 percent invested in transformational transactions, 26 percent in off-the-beaten path transactions and 13 percent in traditional buyouts.

TPG VIII is expected to follow the same strategy as TPG VII, according to a source familiar with the fundraising.

TPG declined to comment.

The firm is focused on investing in six core industries: healthcare, technology, internet digital media and communications, consumer, industrials and business services and energy.

The interactive chart below shows the firm’s previous fund performances. The bubbles are sized proportionately to the size of the fund; toggle between the tabs to see how they have fared by net internal rate of return and multiple on invested capital.