TPG Seeks More Than $15 Billion for Buyout Fund, Investors Say

TPG Seeks More Than $15 Billion for Buyout Fund, Investors Say

Feb. 12 (Bloomberg) -- TPG Inc., the private-equity firm that last year bought TXU Corp. in the largest U.S. leveraged buyout, is seeking more than $15 billion for a new fund, according to potential investors.

The investment committee of Washington state's pension fund, which met with TPG co-founder David Bonderman Feb. 7, will recommend a $750 million commitment, said Liz Mendizabal, a spokeswoman in Olympia. Bonderman is set to discuss the fund, called TPG VI, with the Oregon Investment Council Feb. 27.

TPG, based in Fort Worth, Texas, is putting together the fund even as deal-making is stalled after a doubling of financing costs in the second half of 2007. Endowments and pension funds, seeking returns that top stocks and bonds, are increasing their investments with private-equity firms, whose assets may reach $5 trillion by 2012, according to research firm Private Equity Intelligence Ltd. in London.

``The public markets are down or soft and there's no other game,'' said Lyons Brewer, a managing director of C.P. Eaton Partners LLC, a Rowayton, Connecticut-based firm that helps buyout firms and hedge funds raise money.

Funds raised a record $502 billion last year, according to Private Equity Intelligence, including $21.7 billion by New York-based Blackstone Group LP, the industry's biggest pool.

TPG Partners IV, the $5.3 billion fund the firm started in 2003, has since returned an average of almost 36 percent a year to investors, according to data on the Web site of the California Public Employees' Retirement System.

LBO Decline

TPG spokesman Owen Blicksilver declined to comment. The firm, founded in 1992, changed its name from Texas Pacific Group last year.

Private-equity transactions announced last month dropped to $13.2 billion from $27.7 billion a year earlier, data compiled by Bloomberg show. Firms announced a record $761.9 billion of deals in 2007, including TPG's purchase along with New York- based Kohlberg Kravis Roberts & Co. of Dallas-based TXU, the state's largest power producer.

The Washington State Investment Board's commitment would be its fifth TPG investment and would match the $750 million it put into TPG's fifth buyout fund, a $15 billion pool raised in 2006.

``They are one of the most highly regarded and successful private-equity firms globally, with many strong attributes that fit well with our private equity targets and strategy,'' Mendizabal said.

Oregon also has a relationship with TPG dating back to the firm's 1994 fund, which had a return of 36 percent, according to data compiled by Oregon.

``We have a lot of faith in them and they are our largest relationship next to KKR,'' said Ron Schmitz, chief financial officer of the Oregon Investment Council.

BLOOMBERG