- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the TPG's Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded. Please go to TPG's IR website to obtain the earnings materials. I will now turn the call over to Gary Stein, Head of Investor Relations at TPG. Thank you.

begin. may You

Gary Stein

Welcome operator. third XXXX quarter Great. to call. earnings Thanks, our

Winkelried, morning Officer. Officer; this me Chief are Financial Joining Chief Jon Executive Weingart, and Jack

addition, call. will be and for Jim the are and of Executive available here President, this portion morning's also and Todd Sisitsky, In Coulter; us with Q&A our Chairman our Co-Founder,

filings measures that obligation update performance. forward-looking materially required undertakes do statements, not believe GAAP immediately pro is measures, of completed could presenting discussion to and SEC non-GAAP guarantee these from through analysts Before that we and non-GAAP remind for We factors differ to the as release and to investors during XXXX lens are that like financial IPO. our cause for GAAP earnings it measures, reflecting to TPG's you this earnings events the forma TPG's statements refer details or reorganization for was actual Please helpful structure, information. to begin, I'd results and statements. historic to on TPG release earnings and by prior pro except understand call any no results and to forma refer TPG's law. Within or please the may include our release, future the go-forward revise and we forward-looking

management interest to business. any an call offer solicitation or that figures the TPG We in financial GAAP website. note constitutes fund. on non-GAAP is the will certain in of purchase nothing this also the of a believes on measures which non-GAAP These call sell available an company's are release, relevant that an are discussing TPG's offer on earnings this to measures Please the performance reconciled in nearest be assessing to

we net $XXX earnings Looking per GAAP briefly of the or and million distributable million results share. reported income of $XX after-tax third quarter, $X.XX our for at common

now will which Jon of of common a record stock, A X Winkelried, to holders call like December turn of of Class $X.XX over Officer. common be the declared dividend XX. paid per to also as I'd share Executive on We Chief November to

Jon Winkelried

We're Thanks, our quarter excited to Gary, results morning, good today. third and strong everyone. share

For some a quarter, to the will about fee-related and fee-earning detail earnings heard market this have you share across for into our earnings and creation value this we're our markets growth sequential Jack in AUM, strong in portfolio. we in that, take as during a before do But the and the the like morning I'd on complex generated operating I the further we time and generally. season position firm. a lot It's environment. macroeconomic thoughts geopolitical Investors quarter.

well. for create environment for like means of periods of we this TPG. investment business built ago, thematic on which years to challenging cycle the for Investors perform some focus dry several have backdrop, portfolio, our our record our including see can opportunities, realization this around began substantial time. market However, this has in a type Despite what areas, continues We've I'd strategies and we market current like dislocation been preparing been core developed. our to results, this our so powder the innovative

high which inflationary care, been technology and has as of businesses pressures the by property immune sectors to such we Our made not strong secular in sensitive costs, are of rate portfolio and intellectual of growth with has our orientation we to rapid constructed labor prudent targeting while portfolio the companies growth And leverage these to use health climate. less in increases. manage effects support a interest

focus and We capital. businesses need investing solutions on we at of are the disciplined, capital investors valuations leading patient attractive in for and stewards long-dated of creative We finding careful companies in manage.

we few and are a points and complicated we moments highlight our and so pipeline, significant have long I'd set in our to successful in in in well to this believe of up history is There There a We drive stepping opportunity environment. like returns, this are is results. we to forward TPG believe a positioned to execute. continue do like to

in the third reflects performance fee strength fees, management of our of as growth and to FRE. quarter-over-quarter generated our model. durability of TPG stable continue business financial our a in direct Our quarter we under result assets earning the the management margins scale and operating business. significant growth is FRE-centric This

of these to revenues in of stable months $X million grew revenues the growing Fee-related fee-related the compared quarter And quarter from third sequentially. third XX% second and the approximately TPG's XX% billion management history. for exceeded quarter. last grew time revenues the in $XXX were XX FRE of Our for XX% million first fees. $XXX

Partners, Healthcare we Rise. than are of Partners quarter last in success completion during other was ongoing several first closing particularly in headwinds campaigns, the of our over $XX We're at third our year-over-year. the including $X Capital and closes flagship first end, billion raised total with Capital TPG XX% facing quarter XX by $XXX more well-discussed the Asia AUM across TPG's the our which Our flagship In amid and was the billion driven activity strong fundraising step-up for the and months. GPs the This Fund aggregate, billion the business, increased market. fundraising very pleased funds, for including quarter

of and represents AUM. play fundraising ongoing billion of sequentially record and progress powder positioned us XX% $XX our campaigns, quarter. and investment end returns. offense up XX% record of well third is believe we our fee-generating to success This our had drive available for capital the fundraising a dry the We the of Given leaves at

assets. we sold attractive few valuation aggressively the capitalized the years, on and environment Over last

XX% the have into models. some consistently months. We resilient portfolio And This We've strong our financial constructed have companies been and performance themes. creation multiple downturn anticipating market portfolio positioning dislocation. long-term continued time and compression the generating around reflects the been a relative sector-based have quarter the we X% for our our high-quality, last pace building value we've realizations, been for moderated deliberately XX our of given for for growth, of

drive can been through focus has the growth industries cycles. on to trends with durable Our investing secular in continue that

pace slowed in expectations Although opportunities We're resetting longer. while valuation consistent companies. seeing high-quality quarter, increasingly may market broader with the currently in period activity, we're for an in to where and transaction our third a sellers' invest lower, interesting are softer investment adjustment the remain levels

We will continue and to highly selective. be patient

lead our billion, made our in to business, are carve-out powder. of advantage strong equity is Healthcare. largest TPG of claims for provide believe the quarter, starting third periods us active health align, I'll are a With more our pool raising editing combined starting capital these to difficult one platform largely at even competitive markets We had we've after which United recent and was during private Leveraging believe team with software dry that all transactions that ClaimsXten, significant leading funds expertise, of are with financing in the significant we completed the highlight Notably, in-house investing to in sector, see with across us expectations capital access to our and in a capital valuation begin world's enable enterprise environment. position given investments investors. of merger deploy on care of $X.X capabilities mind, Shortly billion attractive arranger We a volatility sitting sidelines. the we're with and a where most banks a role than Change we when extreme the terms some divested the our acquired and debt we several approximately health continue of financing equity. to a markets $X investments of billion capital value our $X care from

Covetrus, specialty also the We pharmaceuticals the company. Generici, health leading take completed technology Italian a and distribution private platform animal DOC an of acquisition of and

of platform, from have Asia acquisition consumer platforms prices impact opportunities growing around scaled innovative a recent strength the completed increased TPG Pacific company with underwrite is energy a other its leading momentum Rise inception the pipeline. of of teams. Pan-Asian billion ago, already Since parts iNova just have and across in Capital the deployed and the inaugural business, the the Asia Climate built investment Southeast a Fund the we just Capital highlights sector. our including Fund In $X.X funds. over and into a year where Asia VIII Our has seeing combination Australia and transaction security across and our robust of our Inflation our significant concerns Pharmaceuticals, and We're region. substantially our growth representing energy cross-border health Act, care Asia climate, currently iNova the several independent and Reduction has investment

commercializing follow-on next-generation Monolith And investment developing During in Energy, technology. just a carbon end, in Rise is and which quarter, which in hydrogen announced the quarter after Rise Form Materials, invested global a black. and leader the clean is battery Climate

solutions I to for meaningfully, fund, fund. want opportunities we the seeing which our With $X.X to we to highlight already resetting capital significant we bespoke prices have the new for marketplace. adjacencies tech closed expectations this deploy IPO created Second, are of tech billion delayed and on provide

are also costs considerably. rate transactions Rising valuation closing we financing be of to result, moderated and deployment real hope on couple that as policy adjustments We a like of I'd interest a to dislocation. significant leading touch have shortly. result to government as estate. market And a has

fund. However, opportunistic new our over XX% fund $X.X larger of on billion capital, prior closed just our than fourth

focus of on experiencing Europe positioned opportunities Despite real we've of equity as than prices. to themes, of the to primarily and be select monetize long-term and we also over invested across able the demand driven investments all at advantage the retail team's in our markets estate So adjust. X which of to X% office secular resulted remaining last believe headwinds. in several drivers, we our challenging considerable well total by Furthermore, attractive been U.S. the in sectors, vehicles less are has are invested backdrop both weeks, the take

over two to hand are highlight there Jack, items TPG I broader ecosystem. call to regarding the Before like the I'd additional

acknowledges named We're business a we that NVIDIA, social to alongside strategy. be announce World that as DeepMind. activities list recently TPG have companies XXXX list. pleased GoFundMe the that PayPal, included their to Rise was impact inspiring This annual had such to of proud part First, number through a were Walmart, Fortune's positive are of companies and Change core

first for recognized to prestigious be Importantly, private global ever we firm the equity this are honor.

in-person the since for We conference was limited strategies highlighted across our our hosted our teams, first This reviewed recently our across many talent compelling with multiple deep capital our our invested shared portfolio our are partners investment in funds. meeting capital the we of of the XXXX, venture our capital most status platform. whom capital annual Second, firm. -- and

like had those on strategies with LPs product to attendance as to had now opportunity in an of the the I'd our We're placed can We team through all he of engage senior and from financial members you us well. our areas call other so trust continued they in take also proud over hand our forward to look our and partnership. results. Jack, to

Jack Weingart

and for and The Thanks, quarter demonstrate morning. business. Jon. morning, the the call our of this joining everyone, us financial for Good strength firm's results thanks third resilience

a progress driving markets, management driving the And in We face performance fee-earning and through of continue significant an increase demonstrate investment sequential to to our cycle allocations. in performance increase our in net volatile strength fundraising earnings. make good fee-related AUM, continues accrued fees these

detail. I'll Now in a more these each through metrics walk of bit

XX% increase drivers of increase compared billion the nearly billion investments, Our and end key quarter $XX to fee-earning XX% an across increase perpetual AUM at end duration of X% quarter, fee-earning AUM was by of of partially primarily billion partners of the year-over-year for Fee-earning estate a during underlying $XX to new of quarter, September $XX during quarter from our the flagship offset of the XX% quarter billion this $XXX the driven increased of the and total combined third the funds capital an at quarter At activation in $XXX care of XX, billion in at health billion our $XX real billion either long-dated and realizations. for to third the from and inception 'XX. $XX $XX creation for year-over-year raising billion platforms, of including $XXX fund AUM compared of of XX% from to billion by This years The funds 'XX. with were billion or AUM XX% $XX or XX% of partners, of raised value our was Asia, capital XX the our increase longer. increased capital, with Rise. the of

was In not earning the to of had $XX duration addition, the which fee-earning fee of X we the quarter. more years at end AUM subject AUM of yet of our XX% growth, or quarter. end billion XX% of at remaining a had And earning of nearly fees the

fees, year-over-year pace in Our year-over-year has which to strong in reduction million were an the due revenue quarter. XX% Total in to increased million increase management $XXX quarter. organic from $XXX of a revenue third fee-related fee-earning third up at X% slower driven transaction last AUM fee growth a in year's to

mentioned, Jon capital closed in month which we as several investments However, role. new played a markets our last team major debt

So fourth quarter. in we the expect fees increase transaction to

Our revenue management of to third with second basis fee led FRE margin, quarter, by along points increased grew XX% compared of the quarter. which FRE XX% continued to the sequentially XXX expansion our XX% for growth

And to tracking we relative target. on target leverage, expect continue to our we're XX% we the have previously, we that year. of an from indicated margin of to ongoing of FRE scale margins plan As benefit ahead as FRE by next expand end operating with

quarter the we last activity discussed million, which were Our after-tax earnings slowdown year-over-year distributable that quarter's $XXX on reflects for the realization third call. in

moderated Jon as we have our and creation we monetizations relatively portfolio. focus driving As of our mentioned, growth in pace value young on

performance after-tax of during the representing lower we quarter driven Importantly, with dividend the distributable drove announced stock, connection combination quarter. quarterly TPG's monetization net increase substantially per is $X.XX FRE. our accrued strong all A allocations of of earnings, of cash results, value a and share a third Class which creation of XX% our by pace X% common in In our

macroeconomic year. the distributed fundamental with have to remain above-market increase is thematic secular growth per the value hands-on the drove X in challenging this Class compelling believe of of A the XX% approach and months. generally cash of $X.XX sector-based stock quarter first will our common growth. growth with companies revenue our environment, Despite performance This portfolio respect in strong We XX last a quarters X% of with We result the EBITDA increase and and performance strong, the a in investing trends. creation a areas over in share

balance Group non-GAAP sheet to September Turning of TPG XX. the as Operating for the

capitalized We well $XXX are million with million and debt. long-term cash of $XXX of

our facility additional upsized provide we $XXX with quarter, to from million financial third undrawn the million flexibility. During credit to $XXX us

and -- Operating a XX% at our by component balance, had is quarter $XXX at to, the we performance targeting which calls. related billion allocation also River, September million net like $XXX I that of allocations. I'd primarily net performance the September represents accrued the also alluded TPG value eligible second the creation. increase allocation sale $XXX XX of to million to the the as of remains AUM year. was is by We allocation driven of $XX Wind million. transaction to regulatory of Group our XX, XX% This which previous still of of for from balance are as review, have note accrued XX% of discussed performance notable The to end close unrealized A under or we end on

flagship fund this the On our capital than first platform, third were targeting our capital during planned, some to $X We over XX last to you of on close like more our we campaigns. months. billion the And various raising as moving And $X.X target. the which our provide and than a $XX billion completed Now Asia toward billion, third we in with takes quarter. I'd fundraising. more on detail billion raised quarter $X halfway more us for

funds. Fund an $X reached million as hard We total against TPG billion This out predecessor closed the QX, our our to fund which also we billion, our larger target. for real our for raised Healthcare flagship opportunistic billion billion with $XX.X an brings incremental of XX% raise platform, completing fundraising On estate Capital $XX.X incremental during total $X.X combined the Impact an fourth billion of Rise we of a $XXX the our to is billion. the capital cap platform, and On total fund. for on bringing expected, target $X.X commitments than $X.X combined Partners the

we for GP-led including TGS secondaries: Asia Market closes our for X funds and first Lastly, focused Europe. Solutions $X our raised America approximately North platform, in on NewQuest in important billion and

areas completing mid next of additional exploring active two, opportunities. focused X campaigns organic growth we're our number likely fundraising: take number is place forward, next and year; launching just I fund, mentioned; by on several three, number one, which Going to growth the

fundraising many we expect budgets as limited industry, the For LPs do fourth fully be to allocated their quarter the year. have for

a XXXX client expect have next strong year access LP our complete We backlog in successfully our interest of our active their and budgets. campaigns funds as to

open cover. take we call I'd to Before the your there's item one to questions, additional like

primary successful bring year, were our investors. we executing to As significant was share growth of when our that we a could and were experiencing TPG at IPO actives we public earlier planning one this public time with

qualify working across the Russell strong performing indices build create that a end, in power. spring. believe well TPG momentum family of we're business. owned our Board to and by stock they closely our the was rebalance backdrop, before portfolio will traded Another third shareholders. results that become fundamental could took To inclusion value. Class sufficient to liquidity our We're portfolios We year evolving with our objective with the end large of last for pleased voting this a base to amid proud of effective long-term of investment market are and A will our We companies week believe our common enable modify the broad quarter generating be to publicly when we're security that to and next the I'm steps announce

now can like take operator, under strong back to campaigns. the so growth to our broad-based to fee-generating questions. over assets we management call ongoing your in turn and With the I'd as earnings In of a result fee-related addition, we continue fundraising that, expect

Operator

from Craig Bank first with of Instructions] We America. question will [Operator Siegenthaler take our

Craig Siegenthaler

I with positive of valuations, some about conversation your positioning and XX% markets at year-to-date XX% sector to like capital the is point TPG's the look software software And heavy the biggest The overweights business and down with I iShare us today mark So is investors versus software. example, especially think services. in ETF portfolio for given public the in business. think

question the are TPG valuation September portfolios? So revenue also, discount underlying higher the is, combined adjusting the markets? EBITDA given XX valuation and exhibited capital lower trends both the in growth And has multiples, my been across growth with public and how backdrop rate through

Jon Winkelried

for going in we're Yes, drill is I Craig, down to area. that -- to you going have Todd, think,

don't ahead? go you why So

Jack Weingart

Before Todd Todd question. to We part operating a second sense quarter lots address performance every along of look the I'll goes have performance, down. with [indiscernible]. will you give multiples the of been Craig, multiples bringing your for at the and other we data, absolutely operating

Todd Sisitsky

Craig, portfolio growth. strong the well, experiencing thanks to and we're quite perform question. Overall, the for underlying continues really

Capital at to Agent third looking up XXs. the the quarter and mature, Europe Just results, which quarter, year our third U.S. for check businesses, larger business, just in business, the and Capital third prior high revenue more over TPG year in the in quarter example, TPG was business the tends be U.S.

that was XX%, over having that the very quarter [indiscernible] was had in a sectors time this secular tied over effect the this Now -- teams good, XX%, a growth, makes the between on Asia downturn. that last impacted were steady neighborhoods. by difference is the was depending COVID strong of as result. a the effect, frame think The Jon we result that still but time big so fund, and fact right anticipating are funds And invested And sharing, I third is is, particularly which in that up to that growth. active same from a COVID business XXXX rebound

time the just rebound to but we on seeing the forward, at portfolio volumes for COVID. results, part health a indicators, these historical Looking is spend not looking of forward care companies, we're some of what post most because lot in continued

longer slower get continues, provides an the challenging, it Climate little Software it's more finish actually has a the IRA a incumbents, in for a over the little enterprise by attackers. prices, divided but Growth a year. a ad takes more for technology, little a a deals concerns this growing energy It to but decision little end, been the at strong advantage a Internet about security, bit little on longer. driven line. cycles are harder bit large demand taking lower-end trends into media, strong energy for has pressure the there, little persistent higher Consumer growth little softness content, resilience consumer. sales digital with beginning so

relative So part, we're time, and real to watching positioned we're invested all behind. we've but for in we're the this neighborhoods the most very spaces well

Operator

take Goldman question our Blostein will next Sachs. from We with Alex

Alexander Blostein

hear you Can me? Hello? guys

Jon Winkelried

Yes.

Alexander Blostein

Perfect. right. All

before. I Sorry, I was mute, on guess,

that to wanted conversation like I feel the to when fundraising. guess, start the this since with, equity I industry of around the we've [indiscernible] So backdrop. about difficulties year Obviously, just it I fundraising private January spoken, comes the

across XXXX larger sense You of guys to you opportunities on going think you to maybe but the of how if organic on out sprinkle us sort I XXXX. just cumulative with that's you growth if are. be on kind the of level several you you the to evolve. alluded wondering give look seem expand what was And also, you could to new those year. likely into could dollars the set of as how timing sound but help is track same, us flagships, curious a think your Again,

Jack Weingart

overallocated whole do fundraising of GPs regions planning to about. reasons certain that A mean, next think become campaigns of pretty then, the all issue topical the quarter. in were remain first into the about. extending time Alex. started LPs for we've industry. I it's we about we would Look, Sure. have And this Thanks, And expected. talking in out We've we year. the the I lot playing been world about things as as for talking talked a since are been

happen remain this fundraising capital GPs year and need was kind campaigns reasons. same of next the not an the into yet, opportunistic kind I necessarily year throughout most pre-launching for so next year. of the of of launch think element will There challenging coming And that who all year will fundraising didn't

of in next number see the think as the -- abatement market So think remain I bit next you'll of in I year But GPs crowded. will a year see an unfolds. you'll

$XX As remain pleased IPO We're you told billion we out, what would was we tracking raised It's the very the we've year-to-date. point you at with ahead really of track. on have expectation a aggregate prior XX% year increase as year fundraising where down in the same the our market for by industry relative the to a about period the about XX%. X-month is

So like times we're often and of yes, much to more the share see volumes overall down what volumes period interesting. but dislocation you this, in fundraising Transaction slow get for stronger a market players. lower is, shifts opportunities as investment seeing, of new time

So backdrop. with we our feel positioning good about that

As funds, it going flagship year. we the through of them keep we've as relates our saying, to next middle been are open to

of as the industry this I think are my will comments, LPs quarter year. for fourth because be whole allocating most done the the in particularly I for light capital mentioned year,

course I kind during So slowdown consistent year. stronger next the raising players fourth year the in see you'll the think capital a the by of quarter of of and then a

Jon Winkelried

Yes.

being And that's couple back that's lot the putting many recycle good terms in capital remember again also to a comment, in just I that the market. Alex, years. very we a selected in I LPs able course environment, highlight of capital the disciplined are of in of add think well, of just us. the to I think, the it's returning terms larger I -- think last And -- Jack's think to important were just getting -- been think managers that us positively fundraising have I about to the over place that performing to of

perspective. I position about relative feel we from that market So think our in good the

One managers. talk opportunities going focused have of There's try as lot in And side, later we're investment we're going a more opportunities about firm time our the think bit some to partner, new of area had to for substantial had years I organic growth new success the space. new we get doing us initiative, are. innovating we -- say And areas like and we little Next allowed from we seen announced our the be and a that our those. we'll to about -- in on, talked growth. think and to feel we guess the I And had new that's the not there. trying identifying we've strategies remember about -- and that continues X think But or On that areas an call. a can you other over the comments, hired A to ago, that lead on is about while there's this I that expand TPG talked and build feel firm, our I platform to later, but where on to -- how where on grown climate we with as side climate a to to And or announce partner things LP to focused the expectation themes would we're really and continuing we you'll in going my around raised point step-out quite side, interesting grow. to think we or focused sectors And in the feel on a out only lot capital heard Jim last around focused be would that I which these strategies there's developing grow to and [indiscernible], we've market that's lead a little we that a I flow on related of few where strategies. the room like we over but shortly were minority X and that. IPO, something capital meaningful more we're going is commitment that I a is bit effort an when are the our on to continue seed with

both be capital in beginning very of given in it And we on about running so are say shortly. think it's some one it's we grow market, would we're to in where that process GP as estate I We of NewQuest. continuing leveraging in we're off opportunity the LPs what's important strength with being solutions, the the our closes market. a and anchor to one raise the In to think -- real solutions GP then large particularly our laser-focused happening the that that. see very to the relates that capital, and our the it in GP market franchise, area environment the off undercapitalized. that I in TGS secondary And as we're real as Jack we talked estate see And capital opportunity. credit around well is on going in lastly, strategy

a hired As partner you credit was probably real an Sachs. We know, pretty -- opportunities. And a to year Goldman Doug we result is happening think, rates real and estate underwhelming in estate term now, a we Bouquard opportunity opportunity compelling as have came traded market what lead with of as happened a what's structure recently REIT. a the our broadly. He I the publicly and what's from ago

around in So now right some about that. market we're talking LP to capital the forming partners

Operator

take our question next will Worthington with We from Ken JPMorgan.

Ken Worthington

We're Carry just the here. ticking off outlook. boxes

the you mentioned clearly, see can we markets. that So challenging

had XXXX? was realization Can in a on the insights sort and have for view loading year, dependent, call. portfolios is next not. your a slowdown just you this outlook we discussed that get better and very magnitude should market we expect is all seasoning knew I the what before, of You number for of what but this realization the of that factors is of given you you us terms during to carry help hoping a generation in better the in for obviously, portfolios. So the into of front-end mentioned, your frame

Jack Weingart

prior CRE, for that. calls it's not Thanks the for a there's going reason Ken, I've said Look, are for joining. we Jack. forecast question. on to and Thanks that

and value carefully acquire, on focus the which on we like very on to returns companies when -- can. best investors, focus we are carefully we We LPs funds in just generating focus our and we maximizing the for and

of way which One imagine, And of So have best average, magnitude XX% of $XXX period, to promote of order kind kind kind and average. to improve, promote you you call you XX%, high-quality we've that careful of in alluded -- next to backlog it going we're of on balance. selective sell tend sell the through year, tended not of think during meantime, might which In as we're a XX-month the future relative is, X% markets to to underweight to in into market to in the during I monetize going bigger would that of balance, market companies tell to That be we to comments. any this we the million about unless selling XX% in our quarter. have kind annual backlog. deciding historically, the would our gives increased as is accrued companies we building an it, be online.

time. assets to there. other forward-looking I'd accrued comments, that year-end by get I for The remaining at the account helps. unrealized going We're not going we're note, do right thing mentioned right we but River any carry. during because million closing thing -- targeting a a of our number too my PRE to target And in sell Wind amount Hopefully, over period $XXX specific continue in and continues specific of the to to

Jon Winkelried

I think of of hard think, a shifting I environment, is this predict. obviously this the some around The particularly going to it's timing monetizations, to be bit. in

I across under about I XXXX, just think returned generated our funds. capital since we and -- remember to think $XX have really strong LPs -- that our of billion that DPI

time million the the what's this in of I pace But to think And delivered to of So macro of or happening far or generating we precision. averaging shareholders. focused do priority. opportunities generate be be. averaging But understand what on have this to nearly $XXX some years, and inflation harder think to it's I with PRE I about our the to the we're markets is that's think we first going the the of our environment, monetizations like with to level to investors monetize, for picture, you'd that year, with sort what when how predict in in with we spiking XX will our need returns

Operator

Stanley. Morgan our question Cyprys take will We Michael with next from

Michael Cyprys

may Do a the point fully offset pieces deals? purchase that in this to model Is environment talk fixed in side, at on the the back you refinancing a topic color higher cost the can what some What of of you Just on costs about floating then some price interest LDL your versus rate new the rates. enough at come structure you're is the bit of are about is just the Maybe around portion portfolio other you companies. financing and sort new their higher partially? more And little flexing flexing to hedged? is any Or talk interest anticipate Wanted adapting how investment offset? lower to rate cap impacting could how the future? around there environment. how

Todd Sisitsky

through is It's Thanks does, for Sure. But said, uncertain. capital that we as the environment challenging today you prefer definitely and And flow question. think case where for I transaction prices. are us, markets the scarce. it

the large said, It's of to harder mega recalibrate. we quantums sometimes it our of event. like sweet any takes expectations less bit debt, when to sellers But not it Jon definitely in of leverage access for but little commodity. been is of a sort time As a also deals very historically have of spot

our portfolio, If our of actually offered take to us. both we and consistently that's new underwriting leverage about the portfolio you question our the this companies, almost of affects and look full had amount you typically never across

And in which capital inside important -- to be traditionally, as So structure businesses, us like industry it's to is growth that's net focused, is our where only secular really about less these upwards. the the able curve on And we we're of on a our turns accomplish not can in certainly about end, situations growth portfolios, highest which about, to talked levered across we ratios because Xx, And flexibility but are is debt-to-EBITDA the few inflect that. our business, is. we all can grow where the the of Xx. capital inherent growth

really which financial also we that And no the develop which less time levered we important final continue lot an more and like about this. themes it's drives of some very is a growth, entails include It's so the in years, partnering say, with then for done us. have that that capital I'd to leverage maximizing driving is structure. typically environments. of strategics conservative in an environments interesting capability interesting in-house of In the us, engineering part last to I'd of we've in an here returns for what make really area point often have, places. is couple a that And in

fixed. have, and capability. these raised the capital fixed of as deal. our a place a we floating versus out transactions, were billion the occurs have structure. -- is the mentioned, once a into of we bit, And debt debt and We by for debt that's majority of closed we'll, that of we course, course, Jon little real recently to floating, competitive hedge lead It then On fixed arranger portion a $X advantage of of capital get

between lower sit fixed leverage standpoint. levels of in confident pretty we a of feel we terms where the rate So the liquidity and from

Jack Weingart

is And asked we assumed the whether you refinancing other low question in we costs the in do Mike, not future, absolutely do about that. build

the accounted So has more skewed to cost the financing in love we said, outcomes of model. is the higher where environments to positive. of That for being be the distribution

more debt. about are low positive the time to deals. case like almost the have this as costs as were And access, to a you did a rates they always refinance that's when you refinancing financing when opportunistically can happens we So finance higher better to inherent when were, skew that debt and difficult It's risk what there. think do that

Operator

Evercore. question Glenn Schorr We from will next with our take

Jon Winkelried

the to question? you do go Operator, next want to

Operator

Yes.

from with Securities. Brian We will take our McKenna JMP next question

Brian McKenna

Great.

for good to the billion it's see fund. close the Asia $X.X first So

you broader talk in the level is today? market for backdrop? demand So the product, specifically about the region the what current this And can like in then opportunity of deployment related,

Jon Winkelried

want you comment? do to Jim,

James Coulter

Asia. would interest as in U.S. in would weakness we see remains Sure. the There interest Asia is I close be the I The is, say think in there strong shows, to only place

strong there is interest, underweighted U.S., and particularly our into have running in In the China. the about Middle particularly but a Asia. in of call overweighted as outside business we seeing been what internationally, politics. strong seeing some Asia and always to a And bounce in the we're China we questions you're of in economies COVID, pretty we're backs that in Around relative the global strategy. Europe many world, the a very of So thing East. China interest Good post is around arc increase

investors they're offers. are growth that's as what and like in Asia for our So for China, looking looking product growth,

Operator

will Evercore. our Schorr from Glenn question We with take next

Glenn Schorr

this you time? Do me hear

Jon Winkelried

We got Glenn. you. Yes,

Glenn Schorr

oh, that's anything you're piece if expecting? real could together coming opportunity opportunity interest, strategy that on then help what I is if talked about on we're the us together you two, a -- credit, lending for bit. at estate And a maybe we the can the could Cool. transition estate I credit side. it's of little team real reading just that the so on And piece. this curious was is the on One a your for current too it this about of is in bring topic direct one from through a much comments us piece opportunity side, you -- and am the while and talk platform LP sizing into debt of, time,

has the credit. of bigger it to any if curious implications Just theme

Jon Winkelried

think approach respects, of in lot into the don't is, a credit -- think I Glenn, on this your going opportunity. reverse opportunity maybe the think to broader that anything read I Well, I our real from Yes. distinct estate and in corporate question, separate --

either around imply that have I'll so we're And or that we're focused back any. that on our come corporate after. credit not ambitions to that doesn't the or But changed it opportunity it --

in mortgage know TRTX what's the real for relatively now. is you were estate that, estate we And into in time we've I actually the commercial and And scaled think where very second. which developing some scale our mean, while that, -- much The market on obviously, credit around the -- did kicked evaluated we process for of I early and side. going estate were track and to focusing on REIT equity real thought the were real in doing opportunity, more in and establishing record our team with allow substantial -- a would it focused evaluated presence to doing there. are we whether REIT that kind interesting on years, on been private equity were we the a In or last having there to And terms our strong. that also the of us the we of most terms other opportunities we for had number we very wanted over the around of attack we of that build the not industry, terms capital And has while, getting of to we side. performance today of our pools opportunity.

and space we is among actually faster point, hired Doug Our the at opportunity within went in come around around. our different like parts And terms respects and was. LPs strong. different very sectors a the because to -- this market in of following was of understanding It's going the come pretty we of felt some we expertise out, understanding of than thought a space. in have it strong We lot we

see like result a what's return sectors lend series in example, opportunity, on happened so starting estate, an an back with a see changes time the -- that a office banks in of as retail financing market in kind particularly I of going of and environment stepping many which of spaces from certain we willingness the number in terms think market, opportunistic in opportunity, of where example. And their dislocation a in structure of credit in total as the a us real front we to of term we're terms dislocation an real in businesses as to start, is terms what's of investing

opportunity he And And of sectors was a real that of so of a of estate really a large interesting within we're a background pretty where having number kind bullish running the spaces business. Doug through at managed part space Goldman, -- that worked and terms different there's essentially has here. credit in

time. process leveraging to market but this over is in So on of the we're where the large, with -- LPs beginning to now respect chosen of it's a meet right real feel We're it. scalable broadly. position We opportunity on And very in with off estate we've to bullish start our it. very

open-minded of to very we're approaching a of number And opportunity. been how in so listening have the LPs terms

side. that's the real estate we So where credit are in

focused continue be it's side, the credit direct And be credit, to it. important on and continue it. continue to -- to interested very lending continue a a corporate try the ours feel it credit whether generally adding capital And credit to we we to a we we the firm, has priority on a feel as solutions on add in to value We strategy, to to it's way diversify working and platform our On or of continue it our market will strengthen platform, piece time. broader a lot our invest of to strategy like our over We credit us. the platform. in that

focused So don't read not on doing we're are. anything and this into the here, that over because it fact we

Operator

Deutsche We question our from next Bank. will Brian with take Bedell

Brian Bedell

it's maybe on you next be Rise the like XXXX Maybe of potential in market in as in last Reduction just even to focus potentially of least V sort to playbook a just given for whether looks Can context deployment, this you're in where and back X/X a and we're example, sort cycling at you're in of Growth call Climate It the at vintage? deployed the the through looking the -- can you Climate, characterize expect opportunities pace the on about deployment the back the and on faster of deployed fund sometime year. like, be us next Rise there Inflation that an X/X in well. you talked even deployment and if if for for at middle Act, market that can update the

James Coulter

the I X real we and experiencing across been [invest] into dashboard year for have spots our space. climate-related area. in that Whatever a Amidst the of opportunities by substantially here, in the was complicated all backdrop market bright is one you're going this was one this available hoping what's thought happening question increased things.

First of the IRA. all,

incentives. of it's If as you bill, that at a set $XXX look announced billion

our flows we've billion cash at research, high think or that in. $XXX It's might If uncapped, trillion. positive, the incentives the and you dramatically are carefully invested look people already it $X expected those own Within portfolio, more changes. as be as the from things

projects And will ground. very companies news really what have good pass it the up that underwriting it's standards. opens amount of the So for in dramatically we and strict our also

just dramatically really during a something weather year. cheaper So thing, up. has green called prices the which set premium the U.S. the the green frankly, And discount, that marketplace. the have REPowerEU, meaning shifted a lousy European opened Europe is incentives. to has is And also quietly that of third the green much $XXX in billion energy is now was

being capital been picked an deep of I remains of that this everyone's has between and I've seen been on have times said, career many much capital That there specialized a in activity up. so the imbalance amount way. that's my think mind don't the And needed specialized an of formed. as amount in

technology doesn't that for opportunity that to capital you given deep have have gas, are The on and in of capital name oil in a You the have and can or and us. think to area. always about that then that flow More capital knowledge specialized yet the time. It firms that huge the start we've focused the all a address does. in you for exist area been period funds in markets specialized head something that in. the climate And this that's acceleration, will and these

'XX we 'XX. want pacing but careful additional pleased John think see suggest So our I to targeting of that. then. and market is investment to that to, always can you're with Fund. opportunities the there's raise to return -- in fund, you Climate may be lots XXXX adjacent right, and where But expected. alluded products pacing our but 'XX Rise with as bit be, pacing, have ahead pace would of We're the moderate might our now a in And be and climate we us to capital between

Operator

with We next from UBS. question Adam our will take Beatty

Adam Beatty

I fund And lot about wanted talked have you. co-mingled raising we've a LP to co-invest. about ask what and

that there. about wondering the activity of you're Just seeing level

aspects the for on co-invest that capital. you otherwise mentioned that business of firm larger was of deals, in go in One occasionally, bring the either the TPG the roadshow or would outside

you're seeing days. from and kind of there, So just of update the these that interest level LPs looking activity for an

Jack Weingart

Thanks of co-investment things I the in clients. speaking, pursuing alongside very would co-investments to alongside Number generally Jack. for one, have a for there. question. to it's generating been co-investments to see Adam, they Look, we opportunities funds couple our very in our those many long-term important our LPs a partner say remains and who which a want good strategy funds. those co-investments of that's And invest

hear total for year much where be the choppy will toward budgets they topic, that LP little won't like You are to ago. are a generate and funds, co-investment investors. we we've kind were continue opportunities opportunities to this, investors bit that investment committing moving our a are market in more of it combined surprised a talked risk-off But budgetary about, a than to an the LPs many lower attractive facing near of remains in mentality, with for term important constraints and

Todd Sisitsky

Todd, And one I think it's -- adding also it's sorry, just comment.

right that LPs group the the valuable we initial it's think really when thing have and the for more in so benefit have flexibility platform many also it's in opportunity and of when a a an we the that in our make platform investment I scaling particularly to provide capital in relationships want sophisticated up to invest a companies to spent appropriate. real situation, us to studying, we our have those spaces it's years

is that important really of equity business the part a part permanent our a of think it's model. private one ecosystem I So and

Operator

question We will O'Hara take from Gerry next our Jefferies. with

Gerald O'Hara

business more on your should about in fee-paying the probable, of how you're possible the the think you suppose Great. Jack, to margin. business. specifically AUM that earlier FRE we of FRE potential appreciate target. outlined I balancing investment in comments a tracking questions I get I how ahead I suppose, earning or the guess sense my are curious investment the call against on in or But

really trajectory? we So what building put the would here? of you it could that see way, kind should it from think perhaps other slow about Or

Jack Weingart

year; in than expected. -- put higher Yes. comp the it's part haven't coming benefits, expenses, expected side a we the margin anticipated roles hires say hire faster our That's what changed fundraising at year into FRE Those more and Thanks, we really by on us particularly we growth a had Gerry. we people tracking below and question. Good budget. fee-related success to than we growth driven for acceleration taken into because key longer all. revenue bit this faster had our had both our would factors: than driving I in

some we teams next year. our our continued So do into built expectations have investment building for in

FRE course So of should I the do grow next to margin line I'm think of growth. end not I that some likely support do pace the you during target it, of the changing exceed should and us item expect slow probably by costs think the continue long-term that as next year business build the year. infrastructure but that expect to we'll additional to there to are you growth. build we our

Operator

Mason BNP our Paribas. take will with next We from question Luke

Luke Mason

just wanted organic up follow I think most have growth on been opportunities. asked. the I to

there something in versus in about you how of organic about that. growth lift-outs Like activity think is this just kind lift-outs from you do elsewhere? you potentially a is do where market, opportunities Just market inorganic. this side, credit think team the how And bit team doing corporate just slower? maybe Could on for

Jon Winkelried

well the the of organic probably of market like in being in remember Organic a strategies, of over And new terms more how terms broadly. us we you'll grown an growing new or growth evolution size organic both sectors Well, strategies, I as adjacent mutually strategies, or climate for hallmark showed as also from perspective, step-out and innovators been example time. growth the how is funds we've our growth identifying impact has in important inorganic and as firm growth firm us. think not of -- identifying in exclusive for growth our in a and

we're on. that and down about that to allow mentioned our to of That's of to And to some that's overall you highly feed important. on. So going We other capital for continuing And interesting they it not one consistently investment the These be off that opportunities. it they're really about Jim We're focus to the some can nimble, organic on see related us. I us creating focused slow business. another. of talked strategies to we're the growth of really us also ecosystem, relates just in talked climate. focused allow opportunities, that see pools as

and firm with our our a And and how we so invest how core we how grown of capital that's partners. part engage we've LP partners, our with

at what to to TPG. a core part so be that's we do And continue going of

growing about firms scarce or respect is firms that's context, that of capital bit our to sure in in markets things of think making that you in acquisition that know common the and the teams you you terms in growth of that you're doing or which business, right board, other see But fundraising people is I is one of also and it's I is side, the more on and environment, particularly consolidate objectives where before lift capital inorganic the think that our world, the that the businesses. continue -- as bringing business, you're better getting we've our business, completed a a your the these experienced team On buying. to harder share building larger out disproportionately and right deals, talked inorganic the industry, human with creating a a in in of what whether more function opportunities

years, look our would recently but I you industry. growth the accelerated just if it's industry, of -- that's the for so last relatively new phenomenon a this few And history at say inorganic obviously more in that and in

thinking -- our hurry. the So an an firm trying are as we're right that's I on partner. of said I not a as growth which corporate longer focused a And We're find -- as in to credit, we're we're and before, definitely our area we firm. But term. the is -- think about example,

for you. So that's it I'd characterize how

Operator

question our Capital We will from final Hone with Markets. Rufus BMO take

Rufus Hone

the retail provided fundraising appreciate potential growth be the Any how addressing great. opportunity detail for on permanent vehicles? about and But you I would you pipeline. on there of us you're the detail could thinking update capital the

Jon Winkelried

in campaign the that worth virtually market on just with on. to we're all, -- channel, set, in particularly high the think the every space, of level we're engaged net retail first I

said -- the product before, is in. business, our And that we've brand interested so we feel very and our as that like something our is flow channel

our trying campaigns. and are partnerships we in with We have partners, channel access market to one the great every of capital in current

the a that's the strategy. our to a conservative surprisingly a little each more So orientation been feeling I channel participants off been not in see or more will of more within not board. extremely as focused the really -- have of market generally liquid. fundraising surprising demand -- being careful, a say to careful markets be that the it's function risk fixture the within across more that part on investors markets It's sort has of little volatile. of at weaker think And generally I or the all

the across have do our product will this that to source something few that so before, when in and have and And opportunity the capital there pools products products. the opportunities of certain that we explore similar, of types we set experienced certain we'll the product to to continues that of access. to with we're firms pretty more said worth market, part But of active what off that be think select we'll time, have be we'll appropriate a that I maybe channel. other Over retail those of overall, expect demand capital are and I grow, continue of And channel the and types exception that seeing part so. demand broader And that in board, we fits for higher think -- in investors we've net are is down. an something the the as of continue certain

Operator

to closing now Gary additional of Q&A to for I back would any the the concludes This Stein call remarks. call. or portion turn like over today's

Gary Stein

Thank for Thanks, everyone, joining you, this operator. us morning.

next please Ebony. you. back If forward Thank to you have And you questions, quarter. circle any to or follow-up again look me otherwise, to talking we'll

Jack Weingart

Thanks, everyone.

Jon Winkelried

Thank you.

Operator

and Quarter Earnings This XXXX concludes Call today's TPG's Third Webcast.

and may have this time, a at disconnect wonderful your You day. line now

TPG (TPG) 12 Nov 222022 Q3 Earnings call transcript