TPG Operating Group II, L.P. 6.950% Fixed-Rate Junior Subordinated Notes due 2064 Q3 FY2025 earnings call

• Fundraising: Strong Q3 with $18 billion raised, including $12.3 billion in private equity and $4.8 billion in credit. Private equity saw a record first close for flagship funds, credit maintained strong pace with various strategies, and real estate had a successful final close for its credit strategy.
• Deployment: Record $15 billion deployed in Q3, with credit platform driving over half, private equity deploying $4.6 billion, and real estate investing $1.9 billion. Examples include credit platform's $8.3 billion investment, private equity's Proficy carve-out and Hologic take private, and real estate's TREP acquisition.
• Client Insights: Institutional clients in private equity are consolidating, increasing allocations to private credit, and real estate is well positioned with market stabilization and transaction activity acceleration.

TPG's segment performance included strong fundraising and deployment. In private equity, they raised $12.3 billion aggregate across strategies, with a key $10.1 billion first close for flagship buyout funds. Credit saw $4.8 billion closed in Q3, with record credit dry powder over $16 billion. Real estate held a final close for its inaugural real estate credit strategy with $2.1 billion in commitments. Revenue contribution percentages weren't explicitly stated in absolute terms but were highlighted in growth across segments.

• Fundraising outlook: Q4 expected to be active for fundraising across asset classes. 2026 expected to be robust with ongoing and new campaigns in credit, private equity, and real estate. In credit, continued capital raising and new strategies; private equity with capital and climate campaigns; real estate with fundraising for new vintages.
• FRE margin: Reiterated mid-40s FRE margin exit for 2025, expecting continued expansion in the coming years as the business scales.

Concerns in broader credit markets, including certain allegations of fraudulent activity, but portfolios continued to perform well with disciplined underwriting and risk management.

Q: What's the relationship between monetizations and PRE and how does it inform the realization pipeline?

A: Jack Weingart explained the timing of profit allocations early in a fund's life, and Todd Sisitsky discussed intentionality in monetization, constructive liquidity prospects, and dialogues on exits.

Q: With IPO and M&A activity, what's the realization potential out of PE and growth capital businesses?

A: Jack Weingart and Jon Winkelried discussed that they sell companies when right, with accrued but unrealized PRE balance, and Todd Sisitsky highlighted portfolio performance and strategic exit pathways.

Q: Risks and opportunities in AI for the investment portfolio?

A: Todd Sisitsky mentioned early AI investments, AI center of excellence, cautiousness on some horizontal themes, and company-by-company analysis for AI impact.

Q: Growth outlook for credit business?

A: Jon Winkelried and Jack Weingart discussed multiple fundraising channels, increasing dry powder, and expectation of attractive growth years for credit business.

Q: FRE margin trajectory and outlook?

A: Jack Weingart reaffirmed mid-40s exit for 2025, expecting continued FRE margin expansion as the business scales.