TPG eyes up to $3.5bn for The Rise Fund II

TPG could raise up to $3.5 billion for its second impact fund, Private Equity International has learned.

The Rise Fund II will be established next year to pursue the same strategy as its $2 billion 2017-vintage predecessor, according to New Jersey State Investment Council documents seen by PEI. The new fund is understood to have a $3 billion target, Bloomberg previously reported.

Fund II will charge a 1.75 percent management fee on committed capital during the commitment period, 1.25 percent on actively invested capital and 0.5 percent during any extensions, the documents said. Carry is set at 20 percent with an 8 percent hurdle.

Portfolio-related fees and operational services expenses will be fully offset against the management fees. The fund’s key persons are TPG Growth founder William McGlashan; Mike Stone, CIO of The Rise Fund; and senior partners Maya Chorengel and Steve Ellis.

TPG raised The Rise Fund I in about seven months and counts the Washington State Investment Board, Florida State Board of Administration and New Jersey Division of Investment among its investors, according to PEI data. The fund takes control and non-control positions in small- and mid-caps across four core sectors: healthcare, education, financial services and energy.

Fund I sealed its first China deal in May with a $1 billion investment in Baidu Financial Services Group alongside co-investors. TPG made the investment in Baidu FSG from three vehicles: the 2016-vintage TPG Asia VII, which is targeting $4.5 billion, the Rise Fund and its TPG Growth platform, according to a statement.

TPG Growth Fund III, a $3 billion 2015-vintage, had generated a 1.31x net total-value-to-paid-in and 27.7 percent net internal-rate-of-return as of 30 June, the documents said. Its predecessor, a $2.04 billion 2011-vintage, stood at 1.91x net TVPI and 19.6 percent net IRR as of the same date.

TPG declined to comment.