Private equity firm TPG reports 60% drop in profits as asset sales plummet

Private equity firm TPG Inc said on Wednesday its after-tax distributable profits fell more than 60% due to a slump in asset sales across its private equity, growth, real estate and impact.

The Fort Worth, Texas-based company said after-tax distributable income, which represents cash used to pay dividends to shareholders, fell to $113 million from $283 million a year ago, in below an average analyst forecast of $154 million, according to Refinitiv data. . TPG generated just $5 million in asset disposals in the quarter, down significantly from $141 million a year earlier as the company held back sales amid volatile financial markets caused by rising interest rates and geopolitical tensions.

Blackstone Inc, Carlyle Group Inc, KKR & Co Inc and Apollo Global Management Inc also saw lower profits due to slower asset disposals and capital markets activity. “We were a strong seller in much better market conditions for sellers. Our bias is to moderate our selling in this environment and focus on growing our businesses,” said Jack Weingart, chief financial officer of TPG. During the quarter, TPG said its private equity funds appreciated 2.3%, growth funds rose 3.8% and impact funds rose 2.9%, although that its real estate funds depreciated by 0.4%. Under generally accepted accounting principles, TPG reported net income of $53.2 million, down 74% from $205.1 million, due to a sharp decline in investment gains. “Our posture is still the same, which is to say that we still believe this is an attractive environment with the right investment opportunities,” said TPG chief executive Jon Winkelried. TPG said it raised $8.2 billion in new capital, spent $2.5 billion on new acquisitions, generated fee income of $121 million, retained $46.4 billion in unspent capital and declared a dividend of 26 cents per share.

Total assets under management were $135.1 billion, up 7% from the prior quarter, driven by strong fundraising.

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Sallie R. Loera