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Topline
Shares of investing powerhouse TPG jumped 12% within minutes of their public-market trading debut on Thursday, kicking off what’s expected to be a massive year for initial public offerings and making the 20-year-old company one of the world’s most valuable private equity firms.
The private equity firm founded by billionaires James Coulter (pictured) and David Bonderman became … [+] the fifth-most valuable publicly traded private equity firm on Thursday.
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Key Facts
Listed on the technology-heavy Nasdaq exchange under the ticker TPG, shares started trading shortly after 12:15 p.m. EST, surging to $33 from an offering price of $29.50 while the broader market struggled, with the Nasdaq falling about 1.5% while the S&P 500 dipped 0.6%.
The booming stock price boosted the firm’s valuation to about $10 billion, after announcing Wednesday evening it plans to raise about $1 billion by selling 33.9 million shares to investors in an offering that’s expected to close Tuesday.
Underwriters, which include JPMorgan, Goldman Sachs and Morgan Stanley, have the option to purchase roughly 3.4 million more shares of stock, including nearly 1.8 million shares from TPG and 1.6 million from an unnamed investor.
With nearly 307 million shares outstanding, TPG sports a lofty market capitalization of about $10 billion after its public-market debut, making it the fifth-most valuable private equity firm in the U.S.—just behind competitor Carlyle Group ($18.7 billion), but trailing Apollo ($41 billion), KKR ($61 billion) and Blackstone ($144 billion).
Holding some $109 billion in assets, Texas- and San Francisco-based TPG becomes the fifth-largest publicly traded private equity firm in the U.S. by assets, again behind Blackstone ($619 billion), Apollo ($481 billion), Carlyle ($256 billion) and KKR ($252 billion).
TPG’s public market debut follows a “historically blistering pace” of private-equity transactions in 2021, with firms closing 8,624 deals for a record $1.2 trillion, according to a team of PItchBook analysts led by Wylie Fernyhough, 64% higher than the previous peak from 2019.
Key Background
Founded in 1992, TPG in November announced plans to go public and owns outsize stakes in talent agency CAA, Vice Media and Spotify. Its long-awaited debut breathes new life into private equity public listings amid a massive boom in buyout deals. Last year ushered in more than $5.6 trillion worth of merger and acquisition transactions, surpassing the previous record of $4.6 trillion in 2007, according to markets data firm Dealogic. That’s only expected to continue. Cash-rich private equity firms have a record $2.3 trillion in cash and other liquid assets prime for spending.
Crucial Quote
“As more private equity firms elect to go public, merger and acquisition activity is only likely to rise,” says Fernyhough. “Public alternatives managers will do almost anything to be seen as a growth stock rather than a value play, meaning they must constantly launch new strategies and bring in new people.” CVC Capital Partners, another of the world’s largest private equity firms, with some $122 billion in assets, reportedly tapped Goldman to head up an IPO slated for later this year. The transaction could value the firm at more than $15 billion.
What To Watch For
Food delivery service Instacart, meme-stock purveyor Reddit and vegan meat-maker Impossible are among firms eyeing public-market debuts this year. PitchBook Venture Analyst Cameron Stanfill expects the number of deals could possibly hit a new high after a record-breaking 2021, when nearly 1,100 companies went public and raised close to $260 billion.
Further Reading
The Biggest IPOs To Watch In 2022 (Forbes)
Financial Services
