Lately, there have been signs that private equity powerhouses are getting push back from investors. Look at the Blackstone Group LP (NYSE: BX). In the raise of its latest fund, California State Teachers' Retirement System (Calstrs) invested a mere $250 million. Keep in mind that the pension invested $1.7 billion in Blackstone's prior fund.
However, not all private equity operators are having trouble. Take TPG Capital. The firm is apparently in the process of scooping up $30 billion (this is according to The Wall Street Journal). In fact, about $20 billion will be allocated to TPG's leveraged buyout fund. Who said buyouts are dead?
So why the optimism? Part of it is timing. After all, TPG started its capital raising process earlier.
Another key reason is that TPG has a stunning track record. Since 1985, the internal rate of return is roughly 55% (yep, this is something to get investors excited about).
TPG also has extensive experience with distressed investing. For example, the company's founder, David Bonderman, was the top dealmaker for Texan billionaire Robert Bass. During the late 1980s, he structured a variety of key deals that capitalized on the S&L debacle.
And yes, TPG sees lots of opportunities in the current financial meltdown. True, the firm is underwater on its investment in Washington Mutual (NYSE: WM). But TPG understands these kinds of investments take time – and its investors are willing to give the firm the benefit of the doubt.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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