With liquidity problems facing many of its investors who have committed some $20 billion in funding to its deals, TPG is reducing their obligations by as much as 10%. TPG is also cutting annual management fees.
In a Monday letter to investors — who include the California Public
Employees' Retirement System, General Electric Co.'s pension fund and
the government of Singapore — TPG said it recognizes that "in the
current highly challenging environment the global market declines have
placed significant stress on many of our limited partners."
The
firm, whose portfolio includes luxury retailer Neiman Marcus and
gambling outfit Harrah's Entertainment, has offered several
concessions. It will cut annual management fees — ranging from 1% to
1.5% of assets — by about one-tenth, regardless of whether investors
choose to reduce commitments. The firm also said it won't call more
than 30% of an investor's total commitment during 2009, unless approved
by the firm's advisory committee.
"The deal with private-equity
investing is that you're in it for the long haul," said Mario Giannini,
chief executive of Hamilton Lane, a TPG investor. "And with the markets
struggling, TPG is saying we're all in this together."
TPG's $19.8 billion buyout vehicle, its sixth flagship fund, has
stumbled out of the gate. The firm put a total of $1.35 billion into
collapsed thrift Washington Mutual, including $475 million out of the
latest fund. The fund also bought distressed bank loans earlier this
year that have plummeted in value.
TPG Will Let Clients Trim Cash Pledges by Up to 10% – Wall Street Journal
Tags: Credit Crunch, Private equity
