TPG Fund VII scores $10.5bn

TPG has held a final close of TPG Partners VII on $10.5 billion, which includes $400 million commitment from the general partner and employees, the firm said.

A source close to the matter told Private Equity International this seventh fund was targeting $8 billion and had a hard-cap of $10 billion. The person added that the fund began raising capital in July 2014 and was oversubscribed.

Its investor base includes both returning and new investors, the firm said. Limited partners in the fund include Canada Pension Plan Investment Board, Michigan Department of Treasury, Washington State Investment Board, New York State Common Retirement Fund and Virginia Retirement System, according to PEI data.

The fund, which focuses on North America and Europe, has invested $2.1 billion to date in Cirque du Soleil, Cushman & Wakefield, educational software company Ellucian, integrated midstream company EnLink, Life Time Fitness and UK retail chain Poundworld.

“The closing of the fund marks the culmination of a successful era in fundraising across our Capital, Growth, Real Estate, Asia, and Credit platforms, raising over $45 billion and generating strong momentum in the wake of the financial crisis,” TPG co-founder and co-chief executive Jim Coulter said.

TPG launched the TPG Strategic Partnership Interim Fund in January 2014, targeting $1.6 billion, to serve as a bridge fund until it raised this vehicle, according to PEI Research & Analytics.

The fund’s predecessor, TPG Partners VI, raised $18.87 billion in 2008, surpassing the $18 billion target, according to PEI data. It was generating an internal rate of return of 12.8 percent as of 30 September, according to documents from Oregon Public Employees Retirement Fund. When asked why the latest fund was considerably smaller than the sixth one, the source said TPG felt this was the amount it felt comfortable handling coming out of the financial crisis and the amount made sense for where the market is, in terms of the opportunities it sees.

TPG Capital managing partner Todd Sisitsky told PEI separately that TPG is refocusing on the types of deals it knows it's good at, in the sectors and markets TPG has spent years developing experience and relationships in. He called TPG Partners VII “the perfect fund size” to focus on TPG's talent in driving growth and portfolio company transformation capability.

The person also added that TPG had not begun planning for a successor fund.

An earlier fund, TPG Partners V, closed on $15.37 billion, ahead of its $10 billion target.

TPG invests an average of about $300 million per deal and has returned $22 billion to its LPs since 2014.