TPG Capital (formerly
Texas Pacific Group) is one of the largest private equity investment firms
globally, focused on leveraged buyout, growth capital and leveraged
recapitalization investments in distressed companies and turnaround situations.
TPG also manages investment funds specializing in growth capital, venture
capital, public equity, and debt investments. The firm invests in a broad range
of industries including consumer/retail, media and telecommunications,
industrials, technology, travel/leisure and health care.
The firm was founded in
1992 by David Bonder man, James Coulter and William S. Price III. Since
inception, the firm has raised more than $50 billion of investor commitments
across more than 18 private equity funds.
TPG is headquartered in Fort Worth, Texas
and San Francisco, California. The company has additional offices in Europe,
Asia, Australia and North America.
* History and Notable Investments :-
- Founding :-
The Texas Pacific
Group, as it was originally known, was founded in 1992 by David Bonderman,
James Coulter and William S. Price III. Prior to founding TPG, Bonderman and
Coulter had worked for Robert M. Bass making leveraged buyout investments
during the 1980s. In 1993, Coulter and Bonderman partnered with William S.
Price III, who was Vice President of Strategic Planning and Business
Development for GE Capital to complete the buyout of Continental Airlines. At
the time, TPG was virtually alone in its conviction that there was an
investment opportunity with the airline. The plan included bringing in a new
management team, improving aircraft utilization and focusing on lucrative
routes. By 1998, TPG had generated an annual internal rate of return of 55% on
its investment.
- Texas Pacific Group in the late 1990s :-
In 1997, TPG completed fundraising for its second private
equity fund, with over $2.5 billion of investor commitments. In June 1996, TPG
acquired the AT&T Paradyne unit, a multimedia communications business, from
Lucent Technologies for $175 million. Also in 1996, TPG invested in Beringer
Wine, Ducati Motorcycles and Del Monte Foods.
TPG's most notable 1997 investment was its takeover of J. Crew. TPG
acquired an 88% stake in the retailer for approximately $500 million, however
the investment struggled due to the relatively high purchase price paid
relative to the company's earnings. The company was able to complete a
turnaround beginning in 2002 and complete an initial public offering in 2006.
The
following year, in 1998, TPG led an investor group in a minority investment in
Oxford Health Plans. TPG and its co-investors invested $350 million in a
convertible preferred stock that can be converted into 22.1% of Oxford. The
company completed a buyback of the TPG's PIPE convertible in 2000 and would
ultimately be acquired by UnitedHealth Group in 2004.
As the decade came to a close, TPG was once again fundraising, for its
third private equity fund. This time, however TPG was raising not only a new
buyout fund, but also a new fund, T3 Partners that would invest alongside the
main fund in technology oriented investments. In 1999, TPG invested in Piaggio
S.p.A, Bally International (including Bally Shoe), and ON Semiconductor.
TPG has also become recognized for its dedicated operations group that
has become a major part of the process from investment to sale in many of their
portfolio companies. The group is led by Dick Boyce and involves itself in
tricky turnaround situations, operations improvement and other tasks that help
create value in the company. Other major private equity firms have begun to
develop operations group as well, attempting to recreate the model at TPG but
most have had trouble creating as expansive a program.
- Texas Pacific Group in the early 2000s :-
In 2000, TPG and Leonard Green
& Partners invested $200 million to acquire Petco, the pet supplies
retailer as part of a $600 million buyout. Within two years they sold most of
it in a public offering that valued the company at $1 billion. Petco’s market
value more than doubled by the end of 2004 and the firms would ultimately
realize a gain of $1.2 billion. Then, in 2006, the private equity firms took
Petco private again for $1.68 billion.
That same year, in
2000, TPG completed the controversial acquisition of Gemplus SA, one of the
leading smart card manufacturers. TPG won a struggle with the company's
founder, Marc Lassus, for control of the company. Also in 2000, TPG completed
an investment in Seagate Technology.
In 2001, TPG acquired
Telenor Media, a Norwegian phone-directory company, for $660m, and shortly
thereafter acquired a controlling interest in the third largest silicon-wafer
maker MEMC Electronic Materials.
In July 2002, TPG,
together with Bain Capital and Goldman Sachs Capital Partners, announced the
high profile $2.3 billion leveraged buyout of Burger King from Diageo. However,
in November the original transaction collapsed, when Burger King failed to meet
certain performance targets. In December 2002, TPG and its co-investors agreed
on a reduced $1.5 billion purchase price for the investment. The TPG consortium had support from Burger
King's franchisees, who controlled approximately 92% of Burger King restaurants
at the time of the transaction. Under its new owners, Burger King underwent a
major brand overhaul including the use of The Burger King character in
advertising. In February 2006, Burger King announced plans for an initial
public offering.
In November 2003, TPG
provided a proposal to buy Portland General Electric from Enron. However,
concerns about debt and local politics led to Oregon's Public Utilities
Commission regulators to deny permission for the purchase March 10, 2005.Oregon
Public Utility Commission (March 10, 2005).
TPG ventured into the film
business in late 2004 in the major leveraged buyout of Metro-Goldwyn-Mayer. A
consortium led by TPG and Sony completed the $4.81 billion buyout of the film
studio. The consortium also included media-focused firms Providence Equity
Partners and Quadrangle Group as well as DLJ Merchant Banking Partners. The
transaction, which was announced in September 2004, was completed in early
2005.
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