Late in December, I wrote a piece for Bloggingstocks about the voracious private equity firm, Texas Pacific Group (TPG). For 2006, it struck deals worth about $101 billion, with notables like Qantas and Harrah's.
So, TPG is poised to raise a mega fund? Not really. According to a piece in Reuters, the new fund is a measly $1 billion.
Huh? Isn't that chump change?
It certainly is. Given TPG's activity last year, such a fund would not last very long.
In other words, the fund will probably focus on the middle market.
The problem: TPG will compete with a myriad of other private equity firms, which could lead to higher valuations (because of the auctions).
Then again, TPG has a great brand – and this could mean getting better pricing on deals. After all, a prospective target might think there is much more upside in partnering with TPG.
But, TPG's move is certainly interesting. Then again, over the years, the firm has been quite successful by going against the conventional wisdom.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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Reader Comments (Page 1 of 1)
1-06-2007 @ 11:06AM
Ryan said...
I would expect that we will hear TPG raising another megafund in the next 12 months. Your points are on target with the brand value that the firm has established. Bonderman and his troops have established a respectable and solid reputation parallel to the respect that Buffett has established. I am not saying they have the track record of Berkshire, I am saying that their brand and the class of managers is along the same lines. So, true to your point, a management team or BOD in the middle market is going to lean towards a deal with TPG before various other PE firms. You also have to look at the stable of talent TPG has brought to the table. They are not looking for popular politicians as some funds have, rather they are bringing in established experts in a myriad of industries. I would not be surprised to see TPG take on Home Depot in 2007. They are retail strong and have the ability and stable of talent to get it done.