TPG shares jumped on its first day of trading as the private equity group co-founded by billionaires David Bonderman and Jim Coulter became the latest to capitalize on soaring valuations by tapping the public markets to finance growth.
The stock opened at $33 a share Thursday afternoon, lifting its market capitalization above $10 billion.
US-based TPG priced the initial public offering at $29.50 per share as of late Wednesday, the midpoint of the offering range targeted for early 2022. .
TPG is the largest publicly traded company in the US so far this year, and its successful listing comes as the broad IPO market is grappling with poor performance and increased volatility.
Companies have increased a break record $150 billion through IPOs in the US last year, but many of them have struggled to maintain investor enthusiasm after completing the listing. About two-thirds of the firms that listed shares to the public in 2021 ended the year trading below their asking price, with some businesses continuing to fall during the stock market sell-off this month. this.
On Wednesday Justworks, a software company that is poised to list shares this week, said it would postpone its IPO due to recent volatility.
TPG CEO Jon Winkelried told the Financial Times: “The market is chaotic. “This IPO is a high-quality institutional book by a company that is highly profitable and has been around for 30 years. It’s just another part of the IPO market.”
As it goes public, TPG is preparing to significantly expand its platform, which has $109 billion in assets, by launching new funds and investment products and featured acquisitions. TPG raised $1 billion in IPO.
“The trend toward consolidation in our industry is clearly picking up because size is starting to matter more,” said Winkelried. “There are a number of other businesses in the market that are very complementary and exciting for us,” he added, citing potential acquisitions in the credit and infrastructure sectors.
Winkelried also said the listing would help the company grow if the volatile market situation worsens.
“We sleep with one eye open,” he said. “You have to set yourself up for a way that you can take advantage of opportunities as they come and the market changes.”
Bonderman, 79, and Coulter, 62, co-founded TPG in 1992 after cutting their jobs as traders working under Texas oil company Robert Bass. The company became one of the biggest and fastest growing players in the acquisition industry before it stumbled in the 2008 crisis.
TPG was reformed as a generation of young traders focused on smaller deals targeting growth sectors in the global economy, such as software, healthcare and entertainment. TPG also began branching out, launching platforms in real estate and sustainability-related investments that now exceed $10 billion in assets.
The public listing is also being used to bolster succession plans from Bonderman and Coulter. Shares in the company will increase for a group that oversees TPG’s investment platform. Winkelried, who was appointed sole chief executive officer in May 2021, will join Coulter and Bonderman as controlling shareholders through a super-consensus class.
By 2028, TPG will dissolve the group of controlling shareholders to single class stocks, which would qualify for the S&P 500 stock index.
Coulter describes the listing as the culmination of a decade that saw industry peers go public, then adjusted the company’s structure to accommodate mass-market investors.
“We basically waited and learned from what was going on in the industry,” said Coulter, citing TPG’s decision to list as a company instead of a partnership, and to restructure its assets. Its publicity towards management fee based income is currently delivering high multiples in the market.
“We are going to market right now with our governance plan laid out very clearly and a model that we think fits right in. [public markets], “I said. “We doubt others will follow us.”