Side Letter: GP stakes look east; TPG’s $9bn IPO; Ares raises $3.3bn – updated

Dyal's latest coup in Asia-Pacific could inspire the market's growing pool of GP stakes firms to look east. Plus: TPG has set a price for today's IPO and Ares has gathered $3.3 billion for its latest special opportunities fund. Here's today's brief, for our valued subscribers only.

They said it

“It is the new standard. Almost every banker in the space that’s advising private equity firms on IPOs currently is advising to not contribute a large percentage of performance fees into the public company”

Saul Goodman, head of alternative asset management banking at Evercore, tells the Financial Times (subscription required) that TPG’s decision to give public shareholders a smaller slice of performance fees, but more from steadier management fees, marks a step change.

Just happened

GP stakes: No longer rare
What a week for GP stakes funds. Yesterday, Private Equity International reported that Petershill Partners, Goldman Sachs Asset Management‘s GP stakes unit, had raised $5 billion for its fourth vehicle. This came hot on the heels of a final close for Bonaccord Capital Partners, abrdn‘s GP stakes unit, which gathered $1.24 billion in total (more details in Wednesday’s Side Letter).

To top it off, Asian private equity giant MBK Partners has agreed to sell a roughly 13 percent stake to Dyal Capital Partners, Bloombergreports (registration or subscription required). The deal, which is valued at about $1 billion, is designed to help fund MBK’s regional expansion and widen its global investor base. MBK was founded in 2005 by Michael Kim, former co-head of Asian buyouts at Carlyle Group (read our coverage from the time here) and is now the world’s 42nd-largest firm, according to the PEI 300.

MBK marks the latest high-profile GP stakes acquisition in Asia, following AMG’s investment into Baring Private Equity Asia and Dyal’s into PAG in 2016 and 2018 respectively. Together, the trio represent some of the region’s oldest, largest and best known homegrown firms.

As the number of GP stakes firms increases, so too must the pool of targets they’re willing to consider. Dyal’s success in the region could well inspire a number of its peers to start looking east with increasing frequency.

TPG is due to begin trading on Nasdaq today at a $9 billion valuation, according to the Wall Street Journal(subscription required), which says the firm has priced its IPO at the $29.50 mid-point of its projected range. Here are five things you need to know about the listing from TPG’s December prospectus.


Ares-onable sum of money
Ares Management has collected at least $3.3 billion for its latest special opportunities programme, according to December documents from Pennsylvania State Employees’ Retirement SystemAres Special Opportunities Fund II held a first close in October and was aiming to hold a second before the end of the year. The total included a $100 million GP commitment, bringing Fund II within reach of its $4 billion target, though still some way off its $6 billion hard-cap. Ares closed Fund I in 2020 at $3.5 billion, ahead of a $2 billion target. In its latest investor day, the firm reported a 67.9 percent gross and 52.2 percent net IRR for that fund as of June.

An alliance for Boots
Another day, another UK retail giant in the PE crosshairs. This time it’s Bain Capital and CVC Capital Partners, which have teamed up to mount a £6 billion ($8.2 billion; $7.2 billion) bid for health and beauty retailer Boots, Sky News reports. At the centre of the bid is CVC managing partner Dominic Murphy, who played an influential role in KKR’s £11 billion takeover of Alliance Boots in 2007. Murphy served on the board of directors of Alliance Boots and certain of its affiliates from 2007 to 2015 and remains a director of Boots’ US-listed company. Goldman Sachs is said to be running the sale process, with a number of bids expected from other PE firms. Last year saw record PE activity in the UK (the reasons for which PEI explored here); if Boots is anything to go by, expect more of the same in 2022.

Dig deeper

Institution: Iowa Public Employees’ Retirement System
Headquarters: Des Moines, US
AUM: $43.3 billion
Allocation to alternatives: 26.9%

Iowa Public Employees’ Retirement System has promoted Sriram Lakshminarayanan to chief investment officer, replacing former CIO Karl Koch, who retired in December, according to a recent press release from the pension.

Lakshminarayanan was IPERS’ chief risk officer, managing risk and investments in public and private equities. Prior to joining IPERS in 2014, he was director of portfolio management at Mcube Investment Technologies in Princeton, New Jersey and Plano, Texas.

The $43.3 billion US public pension allocates 18.19 percent of its investment portfolio to private equity.

For more information on IPERS, as well as more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Alex Lynn with Carmela Mendoza and Michael Baruch.

– This article was updated on 14 January to accurately reflect that AMG purchased a stake in Baring Private Equity Asia, rather than Dyal.