Three years after allowing limited partners to slash commitments to its fifth Asia fund by up to 10 percent, TPG Capital has launched a sixth vehicle targeting $4 billion for the region, according to documents from the San Diego County Employees Retirement Association.
TPG Asia V raised $4.25 billion in 2008. The firm allowed its LPs to cut their commitments relatively early in the fund’s life, and made the move after reducing the sizes of its $19.8 billion flagship fund and $6 billion financial services fund. TPG Asia V was generating a negative 3.1 percent internal rate of return and a 1x return multiple as of 30 September, according to documents from the California Public Employees’ Retirement System.
Despite the fifth fund’s struggles, TPG Asia has performed consistently in the past. Its aggregate gross IRR over the first five funds is in excess of 20 percent per annum, according to SDCERA documents.
TPG’s Asia team has seen a substantial amount of turnover over the last three years. In 2009, head of Asian operations Dan Carroll left the firm for family reasons. He was replaced by Stephen Peel, who was installed to also lead the firm’s emerging markets team.
In 2010, former partner and lead dealmaker in China Weijian Shan exited to join Pacific Alliance Group as chairman and chief executive. Less than a year later, partner and managing director of TPG Capital in China Mary Ma left the firm.
TPG later poached Jingsheng Huang from Bain Capital’s Shanghai office. He joined the firm as a partner last year.
The firm declined to comment on this article.
For the sixth Asia fund, TPG will follow a similar strategy as its predecessor vehicles, making investments in mid to large-sized businesses in the Asia-Pacific region. TPG Asia VI will invest in growing companies as well as turnaround situations through the acquisition of public and private debt as well as equity securities. The firm will focus on companies in the financial services, consumer retail, healthcare and energy sectors, according to SDCERA.
SDCERA will consider a $75 million commitment to the fund at its meeting Thursday. The $8.2 billion retirement system’s staff cited a favorable investment climate in Asia as well as the firm’s “strong” operations team according to documents.
TPG Asia VI is a 10-year fund with a six-year investment period. The firm will charge 1.75 percent per annum of commitments for a management fee, which will be offset by 100 percent of net directors’ fees and 80 percent of net financial consulting, advisory and transaction fees, according to documents.
The firm’s fundraising effort in the region has not been limited to the sixth fund. Earlier this year, TPG held a first close on a pair of RMB-denominated funds at RMB4 billion ($634.8 million; €483.2 million) which are targeting a combined RMB10 billion.
TPG was founded in 1992 by David Bonderman, James Coulter and William Price III and maintains $49 billion in assets under management.