TPG Private Equity To Go Public​

By Jake Rickman​

What do you need to know this week?

TPG, a US-based private equity house specialising in large buyouts, has announced plans to float its shares on the public market through an Initial Public Offering (IPO).

The PE firm, which was founded in Texas in 1992, is hoping to raise a little shy of $900m from public investors hoping to cash in on the outsized gains made in the private equity markets. It plans to sell over 28 million shares at a value of $28 and $31 per share.

If the IPO is successful, TPG will have followed other PE giants like Apollo and Blackstone, which went public following the aftermath of the 2008 Great Financial Crisis.

Why is this important for your interviews?

TPG’s announcement marks the first big IPO of 2022.

However, additional strategic considerations are at play for investment companies like TPG that are considering listing their shares on the public market. Articulating these considerations will demonstrate to interviewers that you have a deep understanding of the key drivers of investment funds.

As a quick refresher, private equity deals work by a PE house, such as TPG, raising money from other investors (usually pension funds and insurance firms) and then buying out certain companies. PE firms then work with the company’s management to improve the company’s value, with a view to selling the company to another buyer at a later date in the future.

TPG is one of the more prominent PE houses around the world. The firm also invests in other “asset classes” like credit and real estate.

Taken together, these asset classes are not usually available to the average “retail” investor (i.e, you or me). This is because the deals are hard to source, complex, riskier, and require substantial sums of money. The flip side of this is that the returns can be massive, outperforming traditional asset classes.

Traditionally, it was hard to invest in these asset classes unless you were someone with millions of pounds sitting around. But by going public, investors holding the fund’s shares can indirectly participate in the gains made in these asset classes. In a climate where investors are chasing higher rates of return, investing in a company like TPG becomes an attractive proposition.

How is this topic relevant to law firms?

All companies hoping to go public must assemble and prepare thousands of pages of legal documents to comply with the laws regulating publicly traded companies. This prospectus is designed to disclose important information about the company and allow retail investors (you and me) to make a more informed decision before investing.

In 2017, Freshfields Bruckhaus Deringer was the only magic circle firm to win a place on TPG's European roster, with Cleary Gottlieb Steen & Hamilton, Kirkland & Ellis and Sidley Austin securing the remainder of the places.