00:00There's a big curveball here starting the year out. I don't think anybody anticipated a reset of this magnitude in
00:09terms of what's going on now in the market. And and so. So what does it mean for the rest
00:15of the year. First of all I think that when something like this happens there's a reset of this magnitude.
00:20I think that everybody takes stock of what's happening in the portfolio.
00:26Where should we be focused. Where do we need to really direct our attention in order to manage through a
00:36period of a certainty like this. And one of the things that we're doing as a firm is we're you
00:42know when we have something like this happen we pull people together. And we many of us have been through
00:49experiences like this before where you have shocks to the system. You have a lot of volatility.
00:56And as a result of that you need to pull people together and you need to you need to help
01:01people understand what to focus on. Right. So we're doing that actively at TPG where we're getting people together.
01:09And we're saying let's focus on the portfolio. Let's evaluate what's happening here. What's the impact of what's happened. Let's
01:17not take our eye off the ball with respect to where
01:19there are opportunities because I think one of the things that we feel always happens where you have a significant
01:26jolt to the market like this is it always creates opportunity.
01:30And we can talk about that. What does that opportunity look like. Well opportunity in the context of valuations are
01:37going through a substantial reset.
01:39We fundamentally believe that there are going to be really good companies that are misvalued as a result of this.
01:45So that's one obvious opportunity.
01:48Another opportunity that you know we're in the midst of right now as a result of since AI obviously is
01:53a very very important focus of what's going on now is that you know for for you know for some
01:58period of time now based upon how we invest what our sector expertise is.
02:03We've been very focused on how do we accelerate the growth of our companies as a result of AI. And
02:10I think one of the things that we've done at the firm is we I asked one of our senior
02:15people to to to really lead an AI task force which got put in place at the end of last
02:21year.
02:22And one of the one of the functions of that task force is really to to develop discipline on best
02:29practices throughout our various private equity strategies on how do we use AI to be an accelerant of growth within
02:37our portfolio.
02:38How do you figure that out because it is brand new. It's not like this is a field that people
02:42have been studying for decades and you can bring in someone with gray hair who's been doing it forever.
02:46Well you crack that nut when it's just a new territory. Yeah. Well first of all I think even though
02:52AI it feels relatively new in terms of the phenomena of open AI or or you know a number of
03:00these big companies that are now you know develop these these powerful models.
03:04We've we've been investing in the earlier stages of AI at TPG for a while. So it's not like this
03:12is absolutely new to us. I mean we've seen this coming for quite a while that there are going to
03:17be smarter models.
03:18There's going to be improvements in technology. And as a result of that we have invested behind some of these
03:25themes now for a while. Can I ask. So that's the story happening at TPG.
03:29If I were to just zoom out. One of the big impacts we have seen from upheaval in public markets
03:33has been we've seen two big IPOs in the past couple of weeks delayed one in Clear Street one in
03:39lift off a private equity back company itself.
03:42What happens to the IPO market. Can 2026 be the year that IPOs come rushing back. If you have this
03:48kind of volatility in public markets. I think that it's going to be a tale of several cities.
03:54OK. I think that there's no question that the shock the market shock that we're going through right now is
04:02going to curtail a certain amount of public offering activity IPO activity.
04:07There's no question that the shock that we're going through right now is going to cause in certain cases companies
04:13that sponsors might have thought about selling to hold back because.
04:18There's just too much uncertainty to bring a company to market. Right. So you're going to do what's rational in
04:24this environment with respect to do we feel it's a good time to actually try to monetize to sell a
04:30company.
04:31What's going to be the dividing line between which companies you can which you can sector differences you know the
04:38underlying strength of a business because you know it's in a part of the market that is really is really
04:43not being impacted by this.
04:45I mean across you know what I mean our businesses health care our P businesses health care Internet digital media
04:53consumer some some some business services companies and software.
05:01That's right. Right. There's a number of sectors in there. There's a number of companies in our portfolio that we
05:07think are incredibly fabulous companies.
05:10They may be ready to get monetized. If they do we will you know we'll we'll we'll we'll think about
05:15monetizing just so you know the way we think about it as well is that.
05:20We are we are we are we are if you look at our history and our franchise we like to
05:26create multiple paths of exit for our for our for our companies we have a we're well known for doing
05:34deals with in partnership with corporates we're well known for corporate carve outs most of our exits are to strategic
05:42buyers most of our exits are through non IPO ultimately non IPO.
05:48It's implicit in this. Does this mean that others in the industry haven't set themselves up in the same way
05:52that there are those who are too reliant on IPO.
05:55Well if you look at the history if you look at the facts that's I mean that's absolutely the case
06:01different different different firms have different approaches and
06:04different strategies in terms of where they focus their investing energy and also how they set up their portfolios in
06:11terms of how they want to exit.
06:12So in the U.S. as an example I mean there are very few exits there are very few of
06:18our exits that are through the IPO market occasionally that we have we do we do them but most of
06:24them are set up so that we're focusing on strategic buyers in other markets by the way as take India
06:31as an example where exiting through the public markets is probably been the highest source of valuation and you can
06:38exit faster.
06:39In India in India in the last three years I think we've done now over 15 IPOs all of them
06:48incredibly successful.
06:49We've been able to exit our position. But in the U.S. doing IPOs it's a lot. It takes a
06:55long time to exit. So we've been very intentional about how we've thought about how
07:01do we want to monetize our portfolio. So what happens to these private equity funds that are sitting with older
07:06and big assets where IPOs are
07:08the only exit route and the market's too volatile to get them out there. What happens. We're going to wait.
07:14What does waiting look like and how painful is it to
07:17wait. You know I mean I think that under the circumstances that we kind of I mean I guess when
07:24you think about our industry there has been a lot of demand for return of capital.
07:30Right. I mean it's it's probably been too slow overall. If you look at our data our DPI is industry
07:38leading. As a result of that our LP's are
07:43differentiating us. OK. We're being positively selected as a result of our returns and how we've returned capital. So but
07:52the facts are if you sit in
07:55important if you're sitting on a portfolio where you're going to depend on the public markets. You're going to do
08:01just that. You're going to
08:02depend on the public markets. And right now the public markets are not going to take you out. Can I
08:08just ask just to just to put a bow on all of
08:11this. If there is a moment where some funds are experiencing angst be it overexposure to software be it lack
08:18of DPI. We've seen a lot of
08:19consolidation in this industry. You've been part of that. But the credit manager pepper tree last year as well. Does
08:27this just continue at pace then.
08:31There's no doubt that the trend toward consolidation in our in our industry is continuing. I think that you know
08:38the the larger getting
08:40larger. There's good reason for that. Clients want to consolidate their investing activities among the core group of managers that
08:49they can rely on that
08:51they've that they've experienced strong results with where they're getting the benefits of consolidating their activity across asset
09:01classes. If you look at the top 25 managers in the market they the top 25 managers I think accounted
09:08for 40 percent of all the capital
09:11formation in the market. That's that's a lot of consolidation. That's a lot of concentration of power in the market
09:18in terms of the capital
09:20the capital flows. We're in a very we're in a we're in a position where we're in a fortunate position
09:31in that because of the way we
09:33partner because of our performance because of the quality of our businesses. The largest pools of capital in the world
09:43are choosing to
09:44partner with TPG. And so as a result of that what our obligation is to is to continue to provide
09:52great performance but also continue to build
09:55out our capabilities so that we can we can provide them with the time the types of return streams the
10:02types of interesting opportunities on
10:04the investing side that they want across the asset classes. So when you look at our major relationships now they're
10:10investing us in with
10:12us in P.E. in credit in real estate across all the asset classes. And that trend is going to
10:18continue. I think that power is going to
10:21continue to consolidate in the industry. Capital is going to continue to concentrate in the industry. So I don't I
10:28think that there's that. I think it's a
10:31certainty that that's the direction of travel.
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