The worm continues to turn for major private equity firms. TPG Capital is ‘contemplating’ an initial public offering, co-founder David Bonderman said at the Super Return conference in Berlin Tuesday.
IPOs from PE giants
Leading private equity groups, mostly in the U.S. and including The Blackstone Group L.P. (NYSE:BX) and KKR & Co. L.P. (NYSE:KKR), have gone public in the past seven years.
The Blackstone Group L.P. (NYSE:BX) went public back in June 2007 for $4.1 billion.
Carlyle Group LP (NASDAQ:CG) also went public in May 2012, while KKR Financial Holdings LLC (NYSE:KFN) transferred its listing to New York from Amsterdam in 2010. In 2011, Apollo Global Management, which has about 15% of its shares publicly listed, raised $382.4 million through the issuance of new shares from its IPO.
These public issues enabled the private equity groups to evolve from narrowly focused buyout groups to large asset managers also investing in credit, property, infrastructure and hedge funds. Blackstone has now $266 billion of assets under management, of which $66 billion are in private equity holdings.
“Everybody will go public”
Elaborating further on TPG Capital’s IPO strategy, TPG Capital’s co-founder remarked: “At the end of the day, everybody will go public. That will happen in our industry as well. For ourselves, ‘contemplating’ is the right word. We’re thinking about it. But not too hard”.
He conceded that initially there were concerns that being a public company would create conflicts of interest within those groups, stretched between their responsibilities towards public shareholders caring more about management fees, and their duties towards the investors backing the funds, caring more about gains on asset sales. However, he clarified that those concerns have faded and the groups have been able to attract funds.
Akin to earlier IPO wave among Wall Street banks
TPG Capital’s co-founder likened the recent IPO initiatives from private equity groups to a previous wave among Wall Street banks, noting Goldman Sachs Group Inc (NYSE:GS) was the last of those financial firms to become a publicly traded company.
Mr. David Bonderman repeatedly referred to the cyclical nature of the private-equity industry and indicated, while markets are pushing prices for companies higher, they are ‘not out of sight’.