TPG Inc. (TPG) Earnings

Management highlights

- **Leadership and Governance** • A leadership transition was completed in June 2026: Jack Weingart, former CFO, transitions to full-time role as CEO of Global Wealth Solutions, and Axel Andre joined as new CFO with deep public company and insurance industry experience. • Axel Andre confirmed alignment with TPG's FRE-centric, value-focused growth strategy. - **Capital Raising** • Raised $16 billion in Q2 2026, bringing year-to-date 2026 total to more than $26 billion. Private equity strategies raised $8 billion (up 39% year-over-year); credit raised $5.6 billion, including $2.5 billion in new multi-year commitments from strategic partner Jackson Financial, bringing total Jackson commitments to $4.5 billion since February 2026. • Market Solutions held a $1 billion first close for its 11th Pepper Tree Fund, with nearly one-third of commitments from legacy TPG client relationships; fund size is expected to grow 25% from the initial close. • Perpetual private equity product TPOP reached $2.9 billion AUM after one year of launch, with $450 million inflows in Q2; 34% annualized inception-to-date returns, and new international private bank distribution platforms were added in Q2 2026 and early Q3 2026. • Non-traded BDC PCAP reported $193 million gross inflows in Q2 (consistent with Q1), with redemptions of just 2.1% of outstanding shares, well below industry average; 9.9% one-year total net return, outperforming the leveraged loan market by ~420 basis points. - **Investment Deployment** • Invested $14 billion in Q2 2026, up 33% year-over-year, bringing LTM deployment to a record $62 billion. Private equity deployed $7.2 billion (up 60% year-over-year), credit deployed $4.4 billion, and real estate deployed $2.3 billion (up 47% year-over-year). • TPG is lead founding partner of the OpenAI Deployment Company (DeployCo), committing over $4 billion in initial capital to build an AI transformation and services platform for large enterprises, addressing implementation bottlenecks for AI adoption. DeployCo already began operational AI transformation work for TPG portfolio company Consent, driving improved growth and efficiency. • In middle market direct lending, Twinbrook generated $2.3 billion gross originations in Q2, bringing year-to-date to $4 billion, which is ahead of internal expectations; nearly half of new Advantage Direct Lending strategy activity originates from Twinbrook's existing origination network. • TPG real estate acquired full control of grocery-anchored retail platform Echo Realty, and expanded its lower-cost of core real estate footprint, a high-priority growth area for the firm. - **Realizations and Value Creation** • Generated $5 billion in realizations in Q2, bringing year-to-date 2026 to nearly $14 billion, up 28% year-over-year. Notable recent realizations include the sale of Australia-based food platform Maid Group to Danone, and a large-scale luxury hotel in central Tokyo (the largest transaction to date for TPG Asia real estate, and one of the largest hotel deals in APAC). • Portfolio value creation was strong across all platforms in Q2: private equity portfolio appreciated ~6% (second-highest quarterly gain since IPO), driven by mid-to-high teens LTM revenue and EBITDA growth outperforming broader markets; credit portfolio appreciated 3%, with healthy credit metrics and low loss ratios; real estate portfolio appreciated ~3%, led by strength in data center, industrial, residential, and office assets. • Net accrued carry balance increased 15% quarter-over-quarter to $1.4 billion, having doubled over the past four years, positioning the firm for strong future PRE growth.

Guidance

- **Full-year 2026 capital raising**: Management reaffirms guidance that full-year 2026 capital raising will exceed $50 billion, supported by robust first half progress and a strong second half pipeline. - **Management fee growth**: Management expects continued robust management fee growth for the remainder of 2026 and throughout 2027, driven by recent large fundraises and accelerating deployment across the credit platform. - **FRE margin**: Management maintains full-year 2026 FRE margin guidance of 47%, after Q2 2026's 50% margin driven by pulled-forward transaction fees. Longer-term, management expects continued FRE margin expansion as the business scales, driven by high incremental margins on new fee revenue. - **Transaction and monitoring fees**: Management expects transaction and monitoring fees to decline in Q3 2026 due to the pull-forward of some transaction closes from Q3 to Q2, and does not currently budget for a large rebound in Q4 2026. - **Realizations and PRE**: Management expects realizations and realized performance allocations to accelerate toward the end of 2026 and into 2027, as market conditions normalize, with a strong pipeline of exit opportunities across all segments. - **Effective tax rate**: Management expects the effective tax rate to remain in the high single digits in Q3 2026, then step up in Q4 2026 after current RSU-related tax deductions are fully utilized. - **Private wealth growth**: Management expects TPOP inflows to accelerate, with new distribution partnerships coming online, and plans to launch a new non-traded REIT in 2027, followed by a multi-strategy credit interval fund, building out a full suite of flagship evergreen products across asset classes.

Segment performance

The firm does not break out performance into distinct product segments with separate revenue contributions in this call. Aggregate firm-level results are as follows: GAAP net income attributable to TPG Inc. was $93 million; after-tax distributable earnings was $280 million (69 cents per Class A common share). Fee-related revenue grew 27% year-over-year to $628 million, with management fees up 15% year-over-year (up 9% sequentially) and transaction/monitoring fees hitting the second-highest quarterly level on record. Fee-related earnings (FRE) grew 43% year-over-year to $315 million, resulting in a 50% FRE margin for the quarter. Realized performance allocations (PRE) were $35 million, driven by realizations in the growth and credit platforms. Total assets under management (AUM) reached $327 billion, up 25% year-over-year; fee-earning AUM increased 24% year-over-year to $181 billion.

Risks & headwinds

- Volatile macroeconomic conditions, geopolitical uncertainty, changing interest rate expectations, and AI-driven industry disruption have temporarily delayed exit timing across the private market industry, leading to lower near-term realized performance allocations. - AI disruption creates downside risk for some existing portfolio companies; TPG has categorized ~5% of its TPG Capital 8 fund portfolio as at heightened risk of disruption from AI, though no new companies have been added to this high-risk category in the most recent quarter. - The broader private wealth industry has faced recent net flow deceleration across retail-oriented private credit products, driven by broad market concerns about the asset class. - Capital markets revenue (and therefore quarterly FRE) is inherently difficult to predict, leading to potential quarterly volatility in margins relative to full-year targets. - Expansion into lower-fee, larger market segments like investment-grade asset-backed credit creates mild downward pressure on the aggregate core fee rate, even as it drives higher total revenue and margin expansion.

Analyst Q&A

• Q: How does new CFO Axel Andre's insurance background align with TPG's insurance channel strategy, and what is the progress of the Jackson Financial partnership? /

  A: TPG has pursued a consistent strategy of building balance sheet-light strategic partnerships with insurance companies, with the Jackson partnership being the largest to date. The partnership is progressing extremely well, slightly ahead of internal plan, and has created a flywheel effect that expands origination capabilities and allows TPG to serve broader insurance client relationships beyond Jackson. Axel Andre's deep insurance industry experience is highly complementary to this growth focus, and the firm expects to add additional distinct insurance partnerships over time. (248 chars)

• Q: What drove the increase in net accrued carry this quarter, and what is the outlook for near-term realizations? /

  A: The 15% quarterly increase in net accrued carry was broadly balanced between strong underlying portfolio earnings growth, modest market multiple expansion, and equity value appreciation from debt paydown, with the largest driver continued strong earnings growth across the portfolio. TPG generated $14 billion in realizations in the first half of 2026, up 28% year-over-year, outperforming industry trends, with a healthy, diversified pipeline of exit opportunities across climate, software, Asia, and structured corporate partnerships. Management expects realization pace to accelerate in late 2026 and 2027 as market conditions normalize. (359 chars)

• Q: How could the OpenAI DeployCo investment create a differentiated competitive advantage for TPG's sourcing and investment underwriting? /

  A: There is a significant industry-wide shortage of AI deployment engineers capable of transforming enterprise business processes, creating a major supply-demand disconnect. TPG's direct investments in leading large language model firms and its partnership with DeployCo gives the firm unique insight into AI adoption trends, which improves underwriting of prospective investments and supports operational transformation for existing portfolio companies. Combined with TPG's long-standing operational expertise working with portfolio management teams, the partnership creates a distinguishing capability that drives better investment outcomes and competitive positioning in deal sourcing. (334 chars)

• Q: What is the expected growth trajectory and margin profile for the private wealth business as Jack Weingart transitions to full-time leadership of the segment? /

  A: The private wealth business is in an early expansion phase, with investment to build out distribution across U.S. wirehouses, the RIA channel, and international markets in Asia and Australia, and product development to add flagship evergreen products across real estate and credit to complement existing offerings in private equity and credit. While there is near-term investment in distribution, the scalable model allows new products to leverage the existing distribution network, so the business is expected to be margin accretive over time as it scales. Management is disciplined on cost and will not overinvest as the business grows. (327 chars)

• Q: Is there LP hesitation on real estate fundraising given market and rate volatility, and why is credit deployment tracking ahead of expectations? /

  A: TPG is seeing robust LP interest in its real estate strategies, as the narrative of reset valuations, values below replacement cost, and limited new supply has gained traction with investors. Significant co-investment participation from new and existing LPs in current real estate deal flow signals strong future support for fundraises, with first closes planned for late 2026 and most fee benefit kicking in during 2027. For credit, TPG is gaining market share due to strong performance track records and increased dispersion in the market, and there is high demand for flexible solutions-oriented capital from companies facing approaching maturity walls, driving deployment ahead of initial forecasts. (392 chars)