Private equity mogul David Bonderman hopes to take his TPG Capital public in the second half of 2015 — but a difficult fundraising may stop his plans, two sources close to the firm said.
Going public this year is a "mission critical event," a source said.
That contrasts with what Bonderman has said publicly including in September when he told Reuters he was cautious about the possibility of bringing TPG public.
TPG — with $65 billion in assets — believes it can attract a roughly $6 billion valuation, the source said. The Blackstone Group, in comparison, has a $39 billion market cap, KKR $19 billion, and Apollo Global Management $9 billion.
But to be able to reach a $6 billion valuation, Bonderman and other TPG brass believe the PE giant needs its next fund — its seventh — to raise $10 billion, sources said.
While TPG has been fundraising for a little more than a year, attracting investors has been harder than expected, sources said.
TPG has only been able to round up $3.5 billion (when including a $2 billion bridge fund that will be rolled into the vehicle) due to the firm's poor recent track record, a source said.
Another few billion is expected to come in over the next month, the source added.
"The plan was to go public in the third quarter, but Bonderman is worried that may slip if the progress on raising fund seven is poor," a source noted.
The firm, with its rich history, raised $15 billion in its fifth fund in 2006. But it has had some embarrassing losses since then. For example, it lost $1.37 billion of equity in Texas utility Energy Future Holdings — and its biggest investment, $1.7 billion, is in Caesars Entertainment, which plans this month to put its largest unit in bankruptcy, a TPG investor said.
Overall, the 2006 fund has posted a 6 percent annual return through June 30, according to an investor. But most of that is estimated gains since it has returned only $8 billion back to investors, the investor added.
Bonderman is enticing investors — often state pensions — by giving them a chance, too, to be in a separate $3 billion growth fund, a source said.
The more successful growth fund was an early investor in fast-growing Uber and Airbnb.
"I do think they can hit $10 billion," one source said, pointing out the fact that PE investors are starting to get record amounts of capital back from earlier PE investments and need to reinvest the money.
Nonetheless, Bonderman is said to be anxious because he wants to cash out some of his stake at TPG.
In the past, Bonderman, 72, and firm co-founder James Coulter, 54, disagreed on the move, one source added — with Bonderman long a proponent of the move while Coulter has been hesitant.
Bonderman has made news in recent years for hiring entertainment legends like The Rolling Stones, Robin Williams, The Who, John Fogerty and Paul McCartney to play at his birthday parties and corporate events.
Pulling off the $10 billion fund and partially cashing out of TPG would make Bonderman a legend in his own right — and it would certainly free up more time to catch a few of his favorite bands' concerts.
A TPG spokeswoman declined comment.
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