TPG Capital, which brokered some famous failed deals in the last days of the economic boom, is back in the saddle again, or at least, is trying to get $12 billion in funding for another ride. TPG’s fiascos include the $48 billion buyout of TXU Corp in 2006, the $30.9 billion purchase of Harrah’s Entertainment, now Caesar’s Entertainment, and the takeover of Washington Mutual shortly before the government took control of what was left of the moribund bank.
TPG Capital currently has $59 billion in credit, buyout and real estate assets and is one of the last leveraged buyout outfits to raise significant funding; only Apollo Global Management has raised a higher amount than it had before the crisis.
The decline in natural gas prices has nearly wiped out TPG’s entire investment in TXU Corp, and lack of revenue from key gambling centers has hurt Caesar’s. David Bonderman, who is 71 and founded TPG in 1992, has said that he plans a change in focus and will concentrate on smaller deals rather than mega-opportunities that are likely to turn sour. In addition, Bonderman has said he is considering a possible public offering for TPG, as the company may diversify beyond leveraged buyouts.
TPG Capital’s recent efforts seem to be paying off, as it has invested in $750 million on yogurt maker Chobani, $600 million in Danish trader Saxo and took over J.Crew for $3 billion. TPG Capital is returning from 1.8 to 3.2 times original funds to investors, and its returns are in the top 25% of its peers.
It recently raised $700 million from the Oregon Investment Council for a $2 billion bridge fund to keep it going until its new marketing vehicle.
TPG co-founder James Coulter told Bloomberg, “We are best at taking mid-sized companies and changing them. We have really returned to our roots.”