Takeover firm TPG’s fourth-quarter profits jumped 34% on strong asset sales

A screen advertises the listing of private equity firm TPG, during the initial public offering at the Nasdaq market site in Times Square in New York, U.S., January 13, 2022. REUTERS/Brendan McDermid

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March 28 (Reuters) – TPG Inc (TPG.O) said on Monday its distributable after-tax profit in the fourth quarter rose 34% year-on-year, driven by strong asset sales in its private equity portfolio, impact investing and growth equity and real estate assets.

The performance of many private equity firms was boosted by a record deal year in 2021, supported by buoyant public markets, the availability of cheap capital due to low interest rates and the economic recovery from the coronavirus pandemic. COVID-19.

TPG peers Blackstone Group Inc (BX.N), Carlyle Group Inc (CG.O) and KKR & Co Inc all reported record fourth-quarter profits as the companies sold assets for the best price l last year. Read more

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The Fort Worth, Texas-based company said its after-tax distributable income, which represents cash used to pay dividends to shareholders, rose to $137 million from $102 million a year earlier.

Its distributable after-tax profit slightly exceeded Wall Street analysts’ average estimate of $133 million for the fourth quarter, according to financial data provider Refinitiv.

TPG said it generated $7 billion in asset disposals across its portfolio in the quarter and spent $8 billion on new acquisitions, mostly in its private equity and real estate businesses.

Under generally accepted accounting principles, TPG reported a 46% decline in net income to $326 million, due to a slowdown in revenue from capital allocation activities. TPG said it ended the quarter with $114 billion in assets under management and $28.4 billion in unspent capital.

Buyout firms will face a tougher year in 2022. The US Federal Reserve has started raising interest rates to fight inflation and is expected to begin unwinding its bond-buying program, ending in an era of easy financing for leveraged buyouts.

TPG said it still expects to take advantage of investment opportunities in the current climate, particularly among growth-oriented companies that are pausing or releasing IPO plans amid decelerating valuations. stock market.

“The IPO and SPAC markets are essentially closed right now, especially in the growth investing landscape, and we think that creates more opportunities for us as they are competitors to private equity. as companies look for sources of capital,” TPG CEO Jon Winkelried said in an interview.

“We are looking to be financial partners with really interesting solid companies, but in private markets.”

TPG made its public debut in January after raising $1.1 billion in an initial public offering that valued the company at $9 billion.

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Reporting by Chibuike Oguh in New York; Editing by Rashmi Aich

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Sallie R. Loera