Over the past five years, TPG has raised a whopping $52.35 billion for its private equity funds. The upshot: the firm is now the biggest player in the space.True, last year was particularly tough for TPG, which suffered some horrendous deals (such as the wipeout on Washington Mutual). But the firm has shown that -- over the long term -- it can find ways to morph itself and ultimately produce competitive returns.
And yes, this time TPG is making some interesting moves. For example, the firm is highly averse to LBOs (leverage buyouts). Essentially, this is a way to use large amounts of debt to buy a company. However, with the credit squeeze, it's hard to make these deals work.
The upshot: TPG has passed on about 140 deals over the past few months (this is according to a report from the Financial Times).
So, with bulging billions, what is the alternative? Well, the big focus is on buying distressed debt. Hey, private equity firms spent lots of time working on these buyout deals. Why not buy the debt? And, as the economy comes back, there should be some juicy returns.
This is not just the strategy of TPG. In fact, other big players -- like Carlyle, Oaktree Capital Management LP and Apollo -- are doing the same thing.
Tom Taulli is the author of various books, including The Complete M&A Handbook
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
