TPG - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to the TPG Second Quarter 2024 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.

You may now begin.

Gary Stein

everyone. welcome, and operator, Thanks,

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

differ be we're is we SEC cause earnings also performance. a In on addition, our the solicitation to and the any call fund. portion measures, are and not call morning's refer you call. I'd to include revise Jim to and events Co-Founder, actual release the reconciled like presenting GAAP will could of in here or that to TPG this required offer These law. Within our sell in nearest are offer the by or and which on to Executive nothing note President, constitutes business. to believe we forward-looking GAAP Please from TPG Chairman Todd filings our future measures discuss forward-looking statements statements. and non-GAAP factors TPG's guarantee earnings non-GAAP release, do any and measures this an this of available for figures that release call obligation performance of assessing relevant Please Q&A for this remind that as website. Coulter; these may Sisitsky, are our undertakes materially results TPG's purchase statements available no except update or discussion financial earnings certain non-GAAP interest an to in an on that and

as A which of over August on share of after-tax to call of million for A share of be common TPG, of record a Jon. net common per to GAAP at XX, to earnings of Inc. our XXXX, produced declared $XXX a results paid and million $X.XX stock. holders loss Looking second now the $X.XX Class XXXX. I'll the per of We turn we stock quarter briefly dividend or August XX, will $XX Class attributable distributable

Jon Winkelried

everyone. morning, Good Gary. Thanks,

results the highlight to fee-earning quarter our credit in second estate. finished as and strong we momentum scale than across with AUM across strategies $XXX of quarter XX business billion the real Our We and significant private equity, successfully $XXX diversify. more continue and billion

we Over profile growth drove of and earnings inorganic both our step last change in year, a [indiscernible] power of the a and activity. result course as organic

Our firm is areas breadth. in two I'll on in capitalizing And particular. on comments our my expanded focus today,

momentum types differentiated pace First, our active the capital diversified across base; and sourcing of the in raises we our deal product and second, deployment our platforms. are strong across our

topics the over two also hand few to volatility the with touch call days. Beginning last in quarter. taking that's place I'll second the these I billion to before the raising, we over addition raised trading $X.X phone Jack, on In significant fund market been

credit across $X.X of Importantly, our over or raised was this XX% billion capital strategies.

Twin complement close During predecessor. which our fund. we the target for its drawdown held successful original than quarter, total, $X.X billion, final In Brooks' fifth and exceeded the XX% we larger is This and fund raised focus market sponsor-backed to their to direct as outcome track diversify was Twin lending Brooks market. and investment driven on investors strong U.S. lower record exposure the middle companies differentiated seek by

is wealth Europe to and particularly multinational platform power of of addition globally, increased This the in base a and Asia, us. of existing strong its expanded as indicator clients, opportunity towards investor front diversification companies in In Twin our insurance strong Brook support cross-selling meaningfully receiving sovereign and as the from Japan. in funds campaign well

billion $X.X steady the third a at quarter expect by and the by with well Currently, up our TCAP structures of accommodate we TCAP. our new total this two and the of to includes of raising through end quarter. BDC, and to other TCAP evergreen partnerships We continues across as capital added we This in largest capital being Twin raise with base. U.S., platform the capital to investors Brook strategic and broader to as out-originate are warehouses AUM. as nontraded SMAs continue be pace distributed vehicles is the the also our through ended of standing

Turning briefly to our Credit Solutions platform.

raised billion first for we quarter, including the approximately During billion Solutions Credit $X X. of $X.X closing the

closes We second also to held quarter. the total Housing capital the billion additional of the for X, Essential for the at $X.X fund bringing raised end

climate Looking franchise. we that expect platform momentum expect achieve on to objective. In from we billion our seeing fundraising stated tracking our both by ahead of to equity and that clients. and led private strategy, Climate rest robust we're of AUM continue, we our within Last the we year, new impact X we the existing to believe our of quarter, $XX are support that years plan strong Rise

We our that close Climate holding quarter announce expect this to on first next call. and X for a our start to are Rise campaign strong

an the majority target to initiative, in the raised be capital aggregate of this we and expect continue XXXX. the We of across fund South Global $XX to billion and

Additionally, provide before portion strategic $X.X we announced infrastructure fund, our in anchor close year-end first will Hassana of active climate billion other Company, our which Investment May, infrastructure hold RISE with transition additional to with are we In for expect a partnership anchor a fund. and LPs dialogue capital. a to we substantial

organically differentiator growth expand with such a climate in enables powerful adjacent potential, us significant investing into infrastructure. as asset classes position leadership to Our that is

AG. moment pace our across second and our proprietary ways interesting I'll billion over momentum more the We the see, Capital deploying of TPG a invested last pro illustrate to diversified are capital continues the months through a billion in business. we $XX including deployment can our $X.X than our and on you approach. to ramp distinctive sourcing and XX quarter capital on As basis, remains well forma Similarly, spend robust. fundraising is TPG

or to $X of relationships was Over has Europe, carve-out this of equity aggregate nearly corporate from history that thematic months, high completed activity TPG the of invested also deals. core highlight Capital areas. our or into is through partnership. priority More a half a either which were these than a announced X us. differentiated that successful within resulted and of with last value long-standing capital long investments for has XX commitment in a TPG billion want types unlocking region an driving growth and C-level our deals I create complex

just Sisitsky spending returned Todd with the there relationships our President, X strong client and momentum, weeks further Our on after to region. build working teams franchise in closely investment our

and announced remains we last the or pipeline interesting in our have Over transactions strong. Europe months, several closed few

Capital billion This attractive investment carve-out but opportunity industry and to property resilient a an for in in X.X For quarter, second provider the SaaS real stand-alone Bank Aireon's example, represents accelerate as Germany. a of market. European the the solutions announced TPG leading Aireon, a growth EUR fragmented of company from

the newly of that deep Turning leverage Hollywood [ proprietary to Untitled focused formed a of in talent talent a to representation. firm. global and will Untitled [ part build leading on quarter, growth. In Entertainment, our closed diversified experience ] management platform entertainment TPG be the a ] management and and media acquisition we business investing will acquire

of $XXX benefits management commitment and equity of investment a with approximately quarter given Rise at the U.S. Food continue choice and of Rise Smart, an [indiscernible] signed or Our nutrition into differentiated $XXX platform. recently impact million food pace additional climate closed the transactions already capital in partner funds we our an leading have X end, space. Since over to a as million. position deploy led Rise aggregate steady provider

transition. to energy Additionally, large-scale companies plays terminals the in Rise logistics a value represents a investing Climate agreed in critical provider on in acquire the chain enabling California. fuels Olympus focus and renewable role Olympus decarbonization our

real to Turning our estate strategies.

I'll this City. significant basis, acquired the to we're brief these discount transaction attractive to with homebuilding aggregate, assets best-in-class Over and a in a Estate, conversions. from and high-quality TGA's a including the to of last lean need estate been investing investment years, completed has Berlin, the sellers. stress the billion interesting We Within X on were activity, a increase residential a also sellers billion opportunities, motivated our with market highly office growing to we businesses, during environment, of bilaterally patient in and to our combined TPG share Each core in Since we invested approach have quarter, seen we of of of In prior we highlights. European acquiring drive number in working we conversions to at negotiated mid-XXXX, several number mixed-use liquidity, execute opportunities with our into and we property dry properties we in substantial real partners in sourcing anticipating the across real the few York the $X.X investments New capitalizing been focus. in their are estate powder purposely investment system U.K. areas some was Real $XX off quarter, assets expect business logistics in have platform capital Swedish in significant in distinctive deployment. so in

TPG hundreds AG operating across unique sourcing partner local markets Our proposition. its real continues to of value demonstrate leverages which estate model, relationships

net credit, covenants. senior within lending $X we the exceeds with its half in billion. companies, first business returns XX% of originations Twin $X.X investment strong pace a market strategies gross point. bringing has an secured our of across Twin since Twin basis Brook and total with than is generated quarter. second half the $X.X the private middle Brook's Twin more billion. our in continued XXX% deployed Brook lower Twin rate Finally, lien equity-backed of gross record annualized prior This X attractive in are in billion only direct loans of to lending record Brook, by financial leader a to inception first the Brook's origination quarter, year loss first

homebuilders and since Credit of projects deployed launched. investment mandate, $XXX through During our of given has land leading capital the monetize Notably, $X.X proprietary our private first current billion homebuilders project of to approximately largest positions funds, continue the housing our financing essential provides the flexible was the seen evaluating investment We strategy the our funds X.X we Solutions value on pipeline closed which second to public housing, months substantial are our essential business. Credit primarily quarter, currently opportunities of with Solutions X during volume. XX across million origination platform period. Within

We a various public working and are of private to companies bespoke with partner actively with for capital private range solutions. needs

noncorrelated demand to from desire credit, to exposure continue from corporate client we given the see specialty private more diversify Finally, growing credit into risk. away

these given evidenced across the our positioned growth business. Overall, capital we accelerate in billion investment and base. pace credit specialty reach breadth by business, as our global a $X.X Australia finance capabilities our asset-based to is deployed pipelines. diverse the our currently its Each out of first of fundraising During structured demonstrating of to consumer, credit notably, this and fund completed mortgage continue within quarter, of transactions. credit array strategies are Most deployment its momentum, originating well the platform investment

them scale raising our additional Continuing ability product a to with opportunity significant of innovation. a the cornerstone is firm. through combination theme, see driving we to further So this grow capital innovation and of the

and the XXXX, at of during pro Looking the real beginning credit to platform. TPG this Rise we infrastructure, forma classes expect our secondaries business from new growing and including billion and we GP-led will approximately across our includes XXXX end footprint leveraging across This climate scaling period AG. asset for estate $XX of have franchise a expanding frame Japan, our our raised strategies, into geographies, broadening time X-year

is which Our new well-diversified our avenues growth. organic proven to even many innovate more provides across ability powerful for platform,

the over volatility, to seems over risks. market rate more marked last on have a backdrop. Based it briefly entered the increased interest new of by cuts the to the heightened like we market current turn period I'd on and imminent call likely comment geopolitical days, few correction all I we've Before witnessed Jack,

yet impact become since clear more have Although volatile it's clearly economy. how may the far not last late this the markets underlying week,

day are fundamental the from look our every strong. at perspective, and remain investors reasonably We we fundamentals

dislocation experienced across and careers, well with credit opportunities. estate preparing available billion during our like and investment an for positioned market platforms. know equity, to environment market we have periods this many and We've of cycles private invest been $XX We compelling of are our real we capital create long-dated

it turn review to financial I'll to Now our Jack over results.

Jack Weingart

acquired us with of assets more of to Angelo partially of thanks $XXX AUM you the the year-over-year. AUM and $XX was from $XX XX% quarter John, capital second realizations increased raised you, $XX by of billion today. for driven billion by billion of This We Gordon, with Thank management, up and XX% creation, fee-earning ended than value joining over representing powder, $XXX and billion, we to of the months. of all billion billion year-over-year XX XX% under $XX of billion Fee-earning $XX last quarter total AUM. ended offset dry

of the growth earning includes across not fundraising fee-earning quarter. XX% this AUM yet of fees, billion result of the subject had billion increased as which also We This a of businesses $XX our we progress quarter. at to made sequentially and the AUM end credit strong $XX

was revenue the driven acquisition Our XX% $XXX primarily of by fee-related in the Gordon. second Angelo up quarter million, year-over-year,

TPG In the stand-alone contribution basis, TPG revenue grew addition to year-over-year. on fee-related a XX% from organically AG

included FRR management million $XX of transaction fees million. continued QX Our strong $XXX and fees of

a we to the muted deal-specific to in expect the year, Following quarter first be of markets more due strong half factors. revenue third capital

second up As capabilities we and fee-related earnings reported our pipeline look as we quarter, our the we see year, $XXX accelerate begin to year-over-year. of platform. into broker-dealer markets end the remains of and integrating capital to million strong, the the expect XXXX XX% We investment to our credit benefits of new into for activity

the incremental in in trend transaction cash and compensation timing the strong to part quarter above fees, fees of XX% benefited FRE Our catch-up we was of hiring. due from as lower-than-expected margin

This indicated As rise our funds, most second real our performance $X.XX or previously, exceed notably for stock. we several deployment XXXX which earnings in and by full expect benefit million second quarter $XXX increased credit included year new margin credit largely estate. distributable per we've to and we Class was A the share expand continue realized of totaled as After-tax driven activation of to XX% from climate XXXX of allocations, FRE $XX the million fund. common in

evaluating to opportunities been across remains activity we're TPG actively of for portfolios. has compared exit recover the for to Although monetization our deployment, industry all muted and and slower

quarter we make to progress Our realized as expenses work second other $X related line our million declined included streams. of continue income which on and in the from $X item Gordon, noncore last investment integration Angelo to quarter million

the remain around of level We this balance expenses through at integration expect our the reduced to year.

$X.X liquidity. and second to and equivalents well ample providing leverage cash sheet. TPG capitalized continue $XXX our capacity on non-GAAP billion our ended growth. investing We in flexibility remains significant balance undrawn with with Turning and with cash revolver, the quarter us of moderate of million to

performance at second accrued quarter. balance end net Our to stepped million of $XXX the the up

billion currently AUM of is generating AUM. eligible performance which totaled fees. total $XXX XX% our or And Our $XXX performance billion of

perform months. Our investment last value well second our portfolio of to with across for positive platforms has and continued the XX creation the quarter all over

and by last growth have the equity platforms, private pressures grew stable portfolio, and margins as which capital remained have includes Our moderated. inflationary impact over our revenue XX% XX months,

outpace Our private compression. in is thematic months. significant deeply XX has X% And strength the over characterized where believe second equity of strategy by approach PE volatile growth-oriented macro over that This portfolio our portfolio investing, we approximately potential multiple growth will the we last X% quarter XX appreciated disciplined can companies any resulted durability and against last backdrop months. and the in our to XX a inflect in

Turning to credit.

at XXX our XX% appreciated over the with months. quarter funds revenue lending, portfolio portfolio and to as cash in of average the direct were target flow no all of return ranges and well strong our of continues Overall, in weighted X% of the end. the market time more protection financings. resulted above team the losses portfolios companies a We're middle the end attractive or quarter deployment where In quarter, at XX quarter. Our close levels. In realized has value relative aggressively given there and accelerated loan perform approximately last a and line. to was growth tightened, generation particularly and At risk-adjusted has our their longer purposeful This historical across in execution profile, have private private spreads now to significant more believe Credit is basis, pivoting as customized realizations deals in with we XX% a these which monetize have as Solutions, consistent is public into positions the downside return on approach than gains. to continued transactions crystallize

second half in over John approximately XX real of and largest the over private As increase ever quarter months. of XX quarter appreciated the XX basis evaluating And currently back deployment last TPG's and points X% in estate appreciated mentioned, basis in strategy, pipeline second estate X% months. to the real expect points TPG year. the portfolio we're and XX last the the transactions the for the portfolio AG's

estate highly real attributable thematic strong year, flat to quarter secular to construction areas debt sectors. demand, the is core more value down supply growth. rate This includes TPG quality limitations portfolio in of for capital in and transaction has moment. The remained on increased availability the housing which attractive of our as Focusing this see Capitalization a volume. and positive our student industrial, centers, creation in and data light continue to discount and rates driving equity rates rental slightly

result, light opportunistically monetizing a housing industrial built-to-rent been our we've portfolios. across high-quality student As assets and

billion with capital of this raised second Turning to $X.X John mentioned, as fundraising. We during in $X.X credit. raised billion the quarter,

forward, on to to for ahead with $XX capital pacing exceed continue credit guidance objective. June, for strategies year, $X.X We've billion we're raised billion more expect prior consistent our the raised the in Looking this doubling our XXXX. than through fundraising, we credit of so fundraising

raised these year, first we addition, equity campaigns consistent half as the launch by the the half this well of in we growth campaigns climate infrastructure weighted the to billion XXXX driven compared and to and $X to private $XX.X expectation infrastructure which of transition year. grow for of Rise our raised that in expect will as In climate with is total in ongoing the back XXXX, our strategy. We've be our fundraising billion

fund. We'll for the for $XXX Transition third Fund July driving final inaugural includes hold quarter hold a million have on also Fund Infrastructure portion solutions close and progress before call. first Fund, mentioned, from growth to have diversification for fund capital report Rise close next our a We GP new of in commitments to we we make the and Innovations which expect strong final very we're Life pleased held And our for Sciences results we Climate the Ris raised toward bringing second a business. our more our expect Climate overall to Rise close strong the our in total across to our to with John significant up, quarter. continue strategy, momentum for a a As first year-end. Wrapping and close our

experience been and steady a time, across of a with Our positioned well deploying diverse momentum We're in continuing robust performing active we've At campaigns the culture build to billion and at a the strong initiatives and of pursuing powder, to value. variety and have private monetization and the well, scale across are portfolios credit we're drive of we've innovation with we're capital leveraging been our our fundraising investment $XX pipeline growth equity opportunities. dry significant our exciting selectively same of to platforms. long-term potential our pace that opportunities businesses,

operator the take turn I'll your questions. to call to the Now back

Operator

will Our Instructions] [Operator Alex first come Sachs. Goldman question Blostein with from

Alexander Blostein

credit. start I want to with

on So Could the outlook months. obviously, of the quarter? growth was to fee-paying fees XX credit sound importantly, your at the a side. with And some [indiscernible] level, respect high in trend sequentially. sort management deployment little pretty help flat offsets talk a But about what next were and of both the over bridge and AUM good fundraising bit then more in

Jack Weingart

it's I'll Jack. Sure. that. start on Alex,

was of raised. It On capital expect, upon we during being the the the into we is of relatively paying quarter you'd billion reason as quarter-over-quarter the quarter, raised credit fee-paying it. turns really, that AUM the as none AUM flat deploy $X.X because, fee was

the so And saw FAUM fee why, subject my quarter-over-quarter, increased to growth. AUM quarter-over-quarter. to comments, step-up you really that's why much growth that's but no So AUM

I think that how of you that's bridge. So would through kind that's how --

accelerated year. that continue the quarter, expect next in in the FAUM the growth work deploy through capital and the in year of raising raised year Now to we we back we second first and we the just credit as and do expect half

Jon Winkelried

record on going you in on our of on is, in is when pace dynamic there, space. by direct deployment sponsor the lending meaningful And Alex, heard look the a going a and I margin And the in uptick activity at I to the forward think existing origination in Brook terms at thing XX% add the in I our to of would volume we somewhere comments, guess lower middle of the essentially there vicinity the platform. We're only what market you portfolio. outlook add-ons around have Twin it one interesting that to originations is the

cetera, amount basically referred So substantial that's portfolio new generate add-on had the to inherent the continues buyouts. just generate XX% base et in growth to Jack his just that continues in of with beyond comments, acquisitions, the growth portfolio the of to tuck-ins, a

tightening we've On comments, in which my I liquidating selling the been Credit essential very over most contraction accumulated his of is XXXX team obviously, compression that in Jack actively 'XX maybe given side, -- the and book public the our the in early active. that our talked and and about times, spreads. business of Solutions course housing number and a has of comments that and mentioned we spread our we essentially mentioned

levered of creation looks idea and number look -- market to we book. actually the time in give pivoted, what highly have see of a the companies, this of can nature of what's engaged the we we're value in lot kind of the so the signed. expect, given the to terms sort with private some we essentially, flow around would as happening for an XXX that, NDAs market backlog far the of just signed NDAs. we But by sponsors of of spent And pivot opportunities. of sort that year challenges that we at we many you we flow actually have you of measure have like the in refinancing monetizing the of You -- that And

that's you double flow our Just idea, give prior an based. like to

structured, -- done. longer bespoke, more So and are we transactions take get would more naturally, to those

the finally market. to seeing the around volatility that -- interest with And those but I particularly structured credit potential on we're with in an we'll way, uptick expect come lastly, rates for increase we deployment [indiscernible] the down. would now opportunities. the And think in have side, then the So in by

going the market We portfolios those a are number as how different been it and within with to transfer in of interest about among pausing have seeing waiting kind feel relates of banks the transactions rates. who they risk a of of sort on and value variety

partnerships mentioned institutions. We opportunity with the number that I a do. financial in Australia we of able are seeing a were to pickup

we're -- ourselves of capital set the So as for to but formation based we're capital deploy accelerate in year trying versus little pace upon we our business. will formation process actually to hopefully a opportunity bit credit part structured the the our second

Operator

question come Bank will Siegenthaler America. Craig of next Our from from

Craig Siegenthaler

modeling quarterly is We AUM inflow credit, fee-earning fee-earning the billion, it. just $XXX $XXX and you invested AUM have a question on and for $X.X $X.X by fee but only raised also the AUM billion million. million roll earning you grew In

the know of how numbers just question in AUM am numbers big faster is given I deployment quarter, were? lot there, So growth and What in threw but I why out just my I fundraising a the fee-earning credit missing? didn't

Jack Weingart

of AUM we until billion raised, of raised shows invest, end quarter, $X.X that of which into quarter. it doesn't of during powder fee-earning the the It as flow fee-earning subsequent Craig, but ready as deployed, the capital in dry will up was really happen it's the to quarters. AUM none

Craig Siegenthaler

prior $X.X it. billion But capital. Got also invested of you

increases. fee have that wouldn't triggered So

Jack Weingart

just I'm I the during offset was for -- Right. should think the definitely That it by number. looking quarter. realizations

Craig Siegenthaler

Got it.

Jack Weingart

and... you follow can up We with

Craig Siegenthaler

the increase I the also have so really number was and -- was figured there. X, the was a in curious investing number up follow big I fee-earning can so was because big. larger drove I would that AUM. fundraising just And we Yes, between

Jack Weingart

raised and share monetizations. capital our not and follow-up It numbers earning those was the was roughly the -- basically, offset can by was quarter we all deployed during you. fee We with capital

Operator

question Our from next with Cyprys Michael comes SPX Stanley. Morgan

Michael Cyprys

just with deal. and credit Maybe sticking AG the

And like the overseas mentioned into the synergies next synergies the latest business you one bit maybe Gordon up on the Angelo us bringing a investors that know you've happening coming Maybe you some could months, over market out look you from update of could across fund distribution little You to as sounds Brook I of to the synergies out into there. here. from move so elaborate things on the business to Ag XX, expect the just your far drive franchise. just realized some a XX maybe you around look Twin do help as is credit thoughts And bit. you're looking you'd some

update could us kind maybe you initiative So of where that stands. on just

Jon Winkelried

of of for some capital. of -- scale between the the of Yes. with cross-sell underlying able that that pools both AG side, And for opportunity talked experienced what size into drivers of that like capital a think of also The LP of as being terms acquisition, Thanks, crossover on was of part I Mike. those pools in as we and haven't fundraising about, and a historical we a think us major amount felt we as bases. I of our have and -- to fair the participated thesis the sort growth AG just

successfully raise, been we the number look So there where beginning if of example, at that shape. And is to to an cases able Twin you fund really as take have are Brook a together wealth sovereign where where by international funds, were examples of pensions there fundraising combination penetration. large an of that's number area a some our between groups, and partnering particularly X both

you TPG's quite footprint scale global at look existing larger. the of footprint of TPG's acquisition, the base and the of the If the LP bit time at a footprint AGs of was

in Middle the in thing And with Asia so as engagement region, think Solutions in do credit. entire credit structured platform. well with to the across the Same and are from as we've mandates I we we've do look we're the Credit that been been continue have the to both that terms across Brook very to and of true, what Twin way, in the gotten really happy to to have we making platform East, Europe, is continuing by when you able that at progress

relationships And you'll the AG expect to us with those business. respect continuing to is be and capital effort hearing bringing as the in TPG bringing to the traditional fundraising so what side, form with bear on those things be you'll to I similar credit respect from hearing we continue in

the respect how -- we're capital we're pretty side, to engaged cases, that its as of with of extending on well go some expect, I we're evidence a we're the -- the channel on the third area part other with where is the expecting to given as business. we're you a capital. And pools the where that business. in currently so formed our with far well relationships is the Credit with So tangible cases, for number relationship TCAP. encouraged how credit on for multi-strategy private wirehouse of respect a working what major I we're number based platform our in to instance, of In of do Brook, Twin in as reach market. dialogue. large of well as credit up think on about pretty well number with as Solutions as structured optimistic have would channel our we of is then SMAs we mentioned, credit terms as that launches have And wealth to

because companies the quite on NDAs side. areas quite PE credit the ability but deals, we from good So prosecuting to house, after to of structure in of that question of house side report it. And many significant terms you us we've tangible understanding and solutions expect, get And many to -- think are Solutions credit understand between the lending to underlying working the of sponsors progress the private the ability ultimately as private and about example, loan the the mentioned of that credit both these our these of we both companies, that value we're you're engagement I also expertise continue have -- signing and the companies. to that would how seen that equity the we use of we and side side tangible. And of you'll I for business solutions level on as to and against Credit also valuation what opportunities make our with there, of pretty the expect quite other is feel your to out is the fundamentally synergies hear

tangible. quite is together coming sets skill those -- that So

strategy. done private deal We've that the of process strategy which things structure, we think Ryan and that [ to the already that solutions, you Mallet And give more middle actually an is from strategy in called Trio Credit the in -- as led return essentially, we the ] we our are for of doing a Raj equity ] established structured type an side. LP idea, we've the a first just anchor of of new of capital [ opportunity strategy. by [ One launching David are hybrid the Hall Solutions already is ]

of So the new that's the of opportunity a forming X basically businesses. through an combination example

Jack Weingart

Mike, it's Jack.

more little fundraising for data on a you Just the Brook migration. Twin

down you LP If and XX% the V. raising. only just went in this and base, IV X% we fund, Fund base U.S. the insurance look about as LP the John Middle well The the completed Fund said, Asia represented which growth [ in Pac replaced Fund and represented as East. versus IV to Fund XX% and of companies significant of in Fund by Europe at V, ] XX% And Fund type in investor, by last of IV V as

wealth went X% XX%. to And from sovereign

way, So for I end a give real synergy you the distribution. And sense think by the fundraising ] the on kind Brook. those for not fund [ closed-end is MDLX of we're seeing of obviously, numbers the the Twin

sources of -- have our alongside historical MD as We're channel, as are worth you net of not in just client number a we SMAs sit a the number well. additional have large that base oriented high but can TCAP raising SMAs. in the large of those will toward capital, as We imagine, process

Operator

Ken question from next Worthington will Our JPMorgan. with come

Kenneth Worthington

the there later compensation? is so improving you're bringing efficiencies [indiscernible] Angelo contributed Gordon, margins has boosting be and about Were to the the things has expected other items far. And margin I look quarter. the unusual of you're delayed as platform unusual and up also seeing that sort impacting top hiring to as any fees late resolved think well, TPT at focus this then catch Are this been we And growth line there margin hiring sort of to know year. proper? great on that AG

Jack Weingart

Sure.

you your of I little gist I Ken, the think of broke got think, up question, at it. a the bit beginning but I

think particular, asking about in profile, QX. expense the you were margin comp the On I in

flowing factor comp high a will that expense be unusually our year. each think the expenses, we quarter, RSU-related in mentioned and was I as elevated that in last through seasonal QX of QX because

of off down stepping So not was unexpected. that number

I is And to the to do the kick hiring all business of in that expect that it of expand to in, in QX. talked about in piece kick the not QX we've answer we've much other ways referred about. did that The talked and we are, we question, your as -- of in to process that hiring

that expect would normalize to QX expense line QX. in and I So comp

transaction and on about as is we've just expanding at synergy synergies, the a operate cost much at On -- this of a of what more capabilities. this we believe talked distribution being realized was cost course, like our And answered least things cost invest said, most to of that and we're into focused product I'd that. never looking about, we're we $XX we've synergies. expanding we revenue our optimistic not business. on say premised synergies, on cost-efficient million side, back development point, always We're very and That intend this to

Jon Winkelried

terms of of and functions, The that operational a all cetera. add to just organization, et want of integration services the full executed only have functioning I that integration is of to our thing the functions, just of our we all in

completely basically smoothly. done very working So that and is

to full firms the of feel will as the of the ability and We the benefit terms in just from X that integration we capabilities scale grow. well. like as So combined support

Operator

Schorr from Glenn Our Evercore. question come next with will

Glenn Schorr

color little on a for Twin hoping was I Brook. So

great. record track is Your

good first covenants, You ever. mentioned no lien, secured almost loss senior all as

people think a that economic I and some that talk million more in bad a in you at of risk Maybe player client could plays hasn't So a middle-market of actually in backdrop. average the the feel the past. in about a don't that's $XX been risk case decelerating why aspect a control EBITDA asking at question more base

Jon Winkelried

good aspects with think just for that there. I from a you Glenn. the That's a it's great of all doing kind to just I and what got Thank opportunity week get timely question it question, Yes. days a Twin Chicago back digging of And that. ago of we're our team into Well, portfolio. spending sort a few first deep a because of in in was Brook all,

right I are I -- to I companies, smaller you're think that it's if that say statement think think than you generally riskier correct. had companies general a that larger

a However, is the our that relationship with that at are sponsors comments. One way the when have middle you the of we with business and relationships. at market Brook, look that Twin long works deep couple we the working history

of only get borrowers and risk almost get you allows your is And always over of them for of we how work table structured, I the that re-underwriting surrounding And and do. by And understanding way process, a which manage really with sponsors. ways think agents your covenant dynamic it way, as loans as how -- because particularly will, it or them, admin we is which so much covenant they process, on time. We're serially in and the portfolios sell go goes partnership It of back the engaged of add-ons the as And at allows I say to that the the the lending the orientation a for and you that with each what you of that the do back that that, an covenants, alone. One we're to own tweaking table before and result we it essentially, fact usually would relates do structures would for there's you the with some because I terms partnership financial if these and protections of familiarity the had to have look good a have transactional, portfolio, we you their terms is other bit seeing companies But know, are the result getting about of we with equation, serially time level manage when describe of we through the lending I which engaged -- very value, nature interesting for our portfolio. portfolios. mentioned engagement the particularly our think sponsors and you world, to warning in X either and on, kinds less how as being are early we lender, adjustments of how and in they other as we are of changing And larger. basically there's a the systems. with the sole side that, I'd very obviously, like. generally, risk management, it is being TPG are say, financing buyouts. covenants. little that's a all where position in to slightly there's

are So for companies the revolver. drawing instance, like on when

you dips company a So sometimes it's if at stress revolvers series, it's correlated is drawn, time, or sometimes look a with correlated time the in over margin. with

early So warning system. we have an

[ very watch a team watch list. focused have We list is on ]. The the

cases, restructuring the where reaching And in loans. meetings working out reviewing modifications some cases, list. basically to We on, in and sponsors. We're have weekly watch covenant our some we're

important levels We at your of risk are our leverage. not companies that about is to are -- relative lower things risk other thing levels of one of the starting -- point the that

our around We're would leverage, are companies rates, that happened in generally starting starting leverage, are higher Our of market which at slightly whereas we're I at Xx cases rates larger that. X.Xx, are compressed whereas compressed, upper middle buyouts below what the -- around X.Xx. And market when to larger have Xx, and generally lower what's up in has starting as vicinity some like call ratios middle X.XX, starting coverage in more the cases, levels Xx cases, happened market somewhere been upper ratios coverage the of market also coverage leverage. or across compress And and at ratio portfolio, X.Xx gone you coverage to many for or at from of some higher levels whereas like sort ratios, our some have coverages well. X.Xx we've deals, have over levels gone to upper middle in entire interest market, sponsored as look rising of in course

ratio. The different. tolerances business are way. different a are lower the values loan different, result somewhat that's risk that, as the metrics of really are to So a produced what's The managing a loss in we're inherently different fundamentally

a in So believe We expand. the business. business we lot have the grow to and of confidence continues

I million, referred of for them are or million, these EBITDA, we've as look and years. If We've opportunity what million of million $XX of we that $XX well. we for us some grow. companies $XX kind from million, to $XX or essentially million banked about cases, where $XX part companies watched process. [ one but been that clear that think We've there, X, graduating finally $XX opportunities sort intimately company the million, $XX the X of you know at X, In the opportunity we've ] of talked going set is

And ours some as and part some have upside, cases, in so of slightly to of which we done maybe that there we -- come has context in some inherent we and likely, we is a would we with what the get of expense continues loans, are our of market. covenant outside clients with the those of at traditional companies doing because working that of that lot grow form borrowers, around even our business the of certainly it at borrowers. And of that some and be a we're to cov-light with have feel some believe as killers may we what Those focus in like with won't growth deals, we're Twin lot grow capital deal be Brook to Twin funds. one But single a higher. the the Brook category opportunity that

Operator

question Beatty Adam with from Our UBS. next comes

Adam Beatty

complementarity you're like TPG AG I a quarter. there, little but I real real about the the opportunity in And seems deployment the want appreciate comments, estate like how pretty few lingering It tone uncertainty? of bit, the risk managing could, looks leaning capability. my the you're the and words, maybe some it on you from words set if with on of to estate. kind take given balanced TPG of capability maybe ask in your legacy John's also, a

Jon Winkelried

question. Yes, that's good a

let -- complementarity. of the back start is end think question, which me the the I with

side. to just time people, what a quickly, of distinct quite Our have around to sort been on businesses Real remind -- for both long we TPG call what the Estate they do the created estate now, very And franchise, businesses real approaches just Fund and now in a deploying to a IV, $X $XXX the ] is billion We're $XXX are in million. an opportunistic chunks capital right strategy. essentially about range is which Trip targeting we sort million of at [ And fund. investing that are high-return of they've

So we're targeting pretty large check sizes.

estate real as investing as TBG and our TPG AG third-party have partner, about cases, doing an the that U.S. fund in not fund We we where platform and a a it fund the AG regional U.S.-based we're a The style investing on a fund, often but are and funds, side. most opposed operating most talked strategy strategy, we now itself and franchise European Europe funds investing and TPG have single of the XX long Asia of kind investing doing real fund. a years out in in working history, TBG a AG, been real And to partners. dedicated exclusively, have way, there and built the franchise fund with XX has we're value and private our of the over the a with in essentially also that. The to the where the estate estate the -- by course operating capability business acquiring of Japan essentially equity we're is deploying platforms in embedded operating AG --

worked broad as doing deep partner deals. them that deals. And where you on where over we're we've many operating So on multiple partnering with a expect, base would relationships very cases, time in of serially

that partnership side where -- value the it add million. and portfolio with of of range on AG value we we the partners a value-add sort we're $XX is million of way. in estate real as we create buying think can estate kind and more equity in ultimately check believe where deployment equity the to assets the strategy operating of Our with our a $XX real the

how the of being obviously, lot -- of quite X -- benefits it. And are those a of from participating street knowledge some local of various doing -- of level world, terms a basis. markets, the having that's very important, distinctive very which when regions this the at strategies look being there's understanding regions important the is we're in So naturally, of feet country, sector-by-sector on in is you

X billion overall being benefit dry broad of the some having glean market. as that's essentially this so of look powder, we in and position in a said from the offensive a just we franchises puts what -- are. And deep as before, that and there I being knowledge us these is market of like And as result $XX as

cycle. and As beginning basically, say were what on at deal front, doing what you're as upper right of more probably we're terms the doing in interest to upward the think the of we interest rate the I of sort the that deployment measured -- we're far

the sale. more real certainly would with was in estate over And a And as time would measured happening see broadly. dislocation in available we the expected that's are more We happened. what's assets result system, -- that stress of exactly we we some interesting be for

like of. upon the on back the hard a what being back 'XX. as that in when 'XX. I we're of real various and the back rates started deploy And that actually expectation deals would on in to more We we in able assets so continued was back as And vintage of of we people naturally lot. half acquire may to to and bullish across beginning happen, that. a a lot estate into were that did half look are that result we a what capital we assets at to based say those coming I our say, of the basically sort when -- some of deployment to the get cap We've half would happen naturally naturally down in business a rates, hold like that accelerate result

where we've that we're participating bit also of estate perhaps still deploying. more of more very to a real we're that an in into we careful very acceleration sectors broadly seen market some more think are of and certainly capital thematic but are I be in the And the about defensive. that, trying

expertise, certain of in on aspects like we -- coming and it depending defensive. varies to to they're feel continue in quite housing, multifamily we feel have continue upon we're to Student into market quite that where industrial housing, like certain the continue a real although and where are we instance, to deploy, are areas bit for markets regionally And actively we student new the supply in areas the like, market. and very feel continuing deploying so

the specialized announced So manufacturing we Canada, like carve-outs of We continue cognizant Other that. we're Obviously, market. the residential to instance, U.K. we quite of in into. continue cautious stress that, that more of on. market, just like this we carve-outs Certain office. still to like, deals we're market housing see on for lean business continue in to the in opportunity cautious aspects be areas

like to those sectors the we're that's hospitality we becoming where we -- and we're like -- -- so more feel continue terms demand there where of side, the We cautious see opportunities. we leaning unique on terms cautious in where and slowing in of we're in we've ability price got

that's so we're the And right how market now. feeling about

Operator

with Brian Our next Citizens comes question JMP. from McKenna

Brian Mckenna

Okay. Great.

deployed gates least with you've vintages strong capital you good strategies that all has flagship out capital the returns a those of your So latest amount for of for of been and really the at net performance XX%. raised

think So the given capital we round how that should nearly timing for of the about and the funds performance next the these has demand strong raised funds. the of and potential XX% then been capital for deployed,

Todd Sisitsky

Todd. the you It's Well, Great. question. thank for Brian,

the the which to It we've majority, point with TPG in protective investments. really out, downside. flagship, of actually, the structured interesting and fund, have several you some the and XX Europe, portfolio is a Capital As U.S. some your completed the on very corporate we point, focuses signed or risk-reward characteristics have which or them some have think carve-out partnerships strategic are X/X -- combination interesting

say the I'd really pipeline been we're robust pace. be as our and about excited continues well. to excited about So portfolio have the

to start II III in to that put so fund our relates would X and TPGXXand on the LPs, probably X half X the deploying So the we again, been of And raise. that periods ], both advertising very specific first ] your the and track to have this funds reflects market this Partners, next [ in or Healthcare and in TPG XXXX. of Healthcare Partners TPG -- our for targeting we're internally year us question, [ successor this to fund

Operator

from Our Fannon Dan Jefferies. comes with question next

Daniel Fannon

think this think also I scaling year. Jack, one investing where a you've guided well as you more transaction about the margin. on of as margin understand some as is year? you for fees, the as for as But for year next reasonable this funds comments of you we you the balance versus the expectation what us expansion to about mentioned

Jack Weingart

Thanks Yes. Dan. for the question,

lot but will. On really activate the in end a until of of on disclosure, closer growth. credit haven't amount really of We're side, have is that of our much you all deploy business, operating which significant top you of which process than year driven to can fees say shadow in quarter-over-quarter. the levers you on And out That climate-related we this we're this into FRR, by not of we of margin be a and it's disclosed to think raising the the our earning in which the naturally, baseline that We earnings large not yet, of this you particularly yet and flowing expansion raising capital if that about AUM revenue specific pay obviously, to see year, year, committed about we as of which as grew a if will not will capital. off guidance leverage if put we year. FAUM other fees, And think release expect grow. kind in the kind we represents the the that, funds.

So you'll next of full annualization see a year. income fee that

of FRE original TPG are that, our expansion margin on yet. time get just that we as believe of XX%. haven't to those what the all I we our put So And that beyond we'll continue drivers year. businesses, a resumption next scale primary say, to target of back certainly of the we And would our,

Operator

TD with from comes Bill Our question next Katz Cowen.

William Katz

back coming relatively I AUM general. flat, about fee just to of last billion. earning couple Just $XXX at paying been If in look or quarters, fee it's the

appreciate of XX you a months. as we over couple of X XX out So have to vectors to the I next look growth

pick to give path can fee-paying I the through in you John, me mentioned up, is then AUM comments If your walk here? you And had think of that from grow how realization going number you think, prepared you pro the $XX you're of that through up wondering forma me I year-end you June plan 'XX. this that if on raising of year. comparing gross that through the flows could was billion

Jack Weingart

take me let part that. first of Bill, the

we in the reason FAUM drive deployment the the On from forward, FAUM that the AUM but minds, be of that pools we activate is would FAUM. realizations, of certainly will, create The big that the expect step-up positive pickup offset by the these that year. offset of to partially role is flow be side, into then going new throughout significant be course way net the will expect year And expected about all next a drivers will in will think credit than next will our minute that that more I realizations. significant growth on FRR the climate the obviously FAUM. we expect in growth capital we year And

Jon Winkelried

Bill, credit the On I what and end the XXXX understood into including scaling $XX you can Japan, to footprint at geographies, our part XXXX, strategies, have our business we forma franchise GP-led in Rise AG, X-year prepared and TPG across leveraging estate that of billion that of period follow this the expanding up secondaries infrastructure, which will during we across for beginning on we including expect frame latter our broadening real classes was new time sure in asset said raised your with approximately comment. looking question, Climate our platform. you just pro terms making of But the my remarks

So with in can follow that. of the we up terms you of just understanding components

Jack Weingart

And thing it created a Bill, than amount we the those that if fees realizations. money, If from FAUM sold. capital other call actively is at, on selling it, in is sell The Xx lot dropout based nominal value keep we've in to mind, we're less a cases. around, invested it's position earning the on our

Operator

And from our Deutsche come Bank. final question Bedell with will Brian

Brian Bedell

fantastic just Obviously, might a talk to long a and in given penetrated opportunity brand whether back about an maybe tip thinking climate Also Great. to development, infrastructure area on climate how here a back you developed this over be there's go Can -- you across franchise. not the right other space, retail period product time. really it's well alts. about in this retail of basis

also, what the I debt, Jack, as into think some in product mentioned in that on infrastructure that If talk comment mentioned, this cost in of well? I you platform? think can you'll you if you that be you're you looking developing that? that on development, might And -- maybe about reinvesting be to can savings this extent capability

Jon Winkelried

business and launching -- the each you equity then of the one market. can I'll launch he equity beginning XXXX. the vehicles firm each private in, -- that breadth -- first on private comment that bit the probably and of in can our to working Jim, exist franchise we're our quick expecting of is the to if is which them connect the that just that. vehicle, on know, and And we're it launch the as has bespoke, But comment of of comment are make one semiliquid semiliquid I in composition that Obviously, at depending well. a capability as maybe the actively going on

climate compilation equity our piece we private the obviously, deals will It distinct a equity opportunities and as built of is private franchises, the be within have As ultimately and offering that now, a semiliquid vehicle, a have we number the componentry broad over features, of be that the our the but of years have together the the we private we equity firm and put a will across that of including impact and franchise semiliquid vehicle. one franchise, deals of essentially that climate climate.

So with participate additional an the us channel we feel like to distinctiveness has that will to continue give in. what Jim? respect opportunity to

James Coulter

Yes.

the be to the TPG we're there in expect do climate. we of regular product. channel fundraising all, of Rise First launching this part fact, just way demand retail And for for

across calendar, there of that fact, one-on-one always the Texas, interesting series be looking which a but overall is I'll at fact in demand the demand of sense climate, we're marketplace. doing my meetings the you seeing a in In gives

substantial will climate-related semiliquid So product, distribution there the think to a to be opportunities as think I our are very point, it powerful. of Jon's I But platform to differentiator products. expand our

Operator

the conclude closing will today's remarks. I Gary this like back of would turn Stein And the now And call to Q&A for call. portion to

Gary Stein

joining you Great. team. up to free us meantime, today. Thanks, with feel if In operator, you speaking please the to everyone, follow any and thanks, the questions, quarter. for have again with look We forward IR next

Operator

Second Call Quarter this TPG today's XXXX concludes webcast. And Earnings and

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

TPG (TPG) 6 Aug 242024 Q2 Earnings call transcript