Private Equity News & Analysis

TPG allows LPs in Asia fund to cut commitments

The mega-firm, which has already slashed the size of its $19.8bn buyout fund and its $6bn financial-services fund, will give investors in TPG Asia V the option to cut commitments by up to 10%.

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TPG has offered investors in its latest Asia fund the chance to cut their commitments by up to 10 percent, or a grand total of $420 million, according to a person with knowledge of the situation.

The fund, TPG Asia V, closed on $4.25 billion in 2008. The firm has made several investments from the fund, including taking a 55 percent stake in Shriram Retail Holdings for INR8.05 billion (€122 million; $161 million).

Investors though can keep their full capital commitments, with TPG offering to waive its management fee on the amount they could have reduced.

Investors in the fund include the California Public Employees’ Retirement System, funds of funds manager Conversus Capital, the Pennsylvania State Employees Retirement System and the University of Michigan.

Earlier this year, TPG replaced the head of its Asia operations, Dan Carroll, who decided to return to San Francisco for family reasons. Stephen Peel was installed to head up TPG’s entire emerging markets private equity operations, which includes Asia, Turkey, Russia, Eastern Europe and India.

Also, Hong Kong-based Justin Chang, a partner with TPG, left the firm after 16 years in late January. Chang focused on TPG’s technology practice and sat on the boards of several portfolio companies, including computer manufacturer Lenovo Group.

TPG has allowed investors in several of its funds to cut back their commitments, ostensibly to give them some relief. The firm cut the size of its financial service-focused fund, which closed on $6 billion in 2008, by 25 percent – roughly $1.5 billion.

In December, the firm decided to shrink TPG Partners VI, which closed on $19.8 billion in September. The firm allowed LPs in the fund to reduce their commitments by up to 10 percent, or for a total of $2 billion.

UK-based Permira also gave its limited partners the option to cap at 60 percent their original commitments to the firm’s fourth buyout fund, which closed on €11 billion in 2006. Eighteen LPs took up the offer, reducing the size of the fund to €9.6 billion.

TPG declined to comment.