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What changed in TPG Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TPG Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+1029 added−999 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in TPG Inc.'s 2023 10-K

1029 paragraphs added · 999 removed · 621 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+59 added−73 removed85 unchanged
Biggest changeThe platform’s objective is to provide attractive risk-adjusted returns to its stockholders over time through cash distributions. As of December 31, 2022, the TRTX loan investment portfolio consisted of 70 first mortgage loans (or interests therein) and total loan commitments of $5.4 billion.
Biggest changeAs of December 31, 2023, the TRTX loan investment portfolio consisted of 53 first mortgage loans (or interests therein) and total loan commitments of $3.7 billion. 10 Table of Contents Product: TPG Real Estate Credit Opportunities TPG Real Estate Credit Opportunities (TRECO) is our opportunistic, real estate credit strategy targeting risk-adjusted returns through investments primarily in real estate-related high-yield senior and subordinate loans and securities.
Generally, the limited partners of our funds take no part in the conduct or control of such funds, have no right or authority to act for or bind such funds, and have no influence over the voting or disposition of the securities or other assets held by such funds, although such limited partners may vote on certain partnership matters, including amendments to the partnership agreement or early liquidation of the partnership.
Generally, the limited partners of our funds take no part in the conduct or control of such funds, have no right or authority to act for or bind such funds, and have no influence over the voting or disposition of the securities or other assets held by such funds, although such limited partners may vote on certain partnership matters, including certain amendments to the partnership agreement or early liquidation of the partnership.
Primary activities include: • Debt Capital Markets: (i) Structure and execute new deal and acquisition financings across leveraged loans, high yield bonds and mezzanine debt (privately placed and syndicated) and (ii) manage capital structures on an ongoing basis, including re-financings, re-pricings, hedging, amendments and extensions and other services. • Equity Capital Markets: (i) Act as lead advisor and underwriter on capital raises and the monetization of our ownership stakes in the public equity markets, including initial public offerings, SPACs, follow-on offerings, equity-linked products and subsequent realizations and (ii) provide dual-track and structured equity solutions advisory, among other services.
Primary activities include: • Debt Capital Markets: (i) Structure and execute new deal and acquisition financings across leveraged loans, high yield bonds and mezzanine debt (privately placed and syndicated) and (ii) manage capital structures on an ongoing basis, including re-financings, re-pricings, hedging, amendments and extensions and other services. • Equity Capital Markets: (i) Act as lead advisor and underwriter on capital raises and the monetization of our ownership stakes in the public equity markets, including initial public offerings, follow-on offerings, equity-linked products and subsequent realizations and (ii) provide dual-track and structured equity solutions advisory, among other services.
We primarily invest in complex asset classes such as private equity, real estate and public market strategies, which is distinct from most other asset managers that invest only in traditional asset classes such as stocks, bonds or commodities. We have constructed a high-quality base of assets under management within highly attractive sub-segments of the alternative asset management industry.
We primarily invest in complex asset classes such as private equity, credit, real estate and public market strategies, which is distinct from most other asset managers that invest only in traditional asset classes such as stocks, bonds or commodities. We have constructed a high-quality base of assets under management within highly attractive sub-segments of the alternative asset management industry.
Our goal in conducting ESG assessments is to use material, investment-specific sustainability risk and performance factors and indicators to determine the potential for ESG-related risk and value creation, and to support a holistic understanding and appropriate discussion of these findings during investment decision-making and post-closing.
Our goal in conducting ESG assessments is to use financially material, investment-specific sustainability risk and performance factors and indicators to determine the potential for ESG-related risk and value creation, and to support a holistic understanding and appropriate discussion of these findings during investment decision-making and post-closing.
Our actions include investing in diverse-led investment managers and investing in our people: Investing in Diverse-led Investment Managers: In 2019, we launched TPG NEXT to seed new managers, strengthen their access to capital, offer business building expertise and provide strategic advisory support to talent that is chronically underrepresented in alternative asset management.
Our actions include investing in diverse-led investment managers and investing in our people: Investing in Diverse-led Investment Managers: We launched TPG NEXT to seed new managers, strengthen their access to capital, offer business building expertise and provide strategic advisory support to talent that is chronically underrepresented in alternative asset management.
These have included: The Rise Fund, which launched in 2016 and raised its successor fund in 2020; TPG Rise Climate, which launched in 2021; Evercare, which has been part of TPG since 2019; and TPG NEXT, which made its first balance sheet investments in 2019 and launched in 2023.
These have included: The Rise Fund, which launched in 2016 and raised its successor funds in 2020 and 2023; TPG Rise Climate, which launched in 2021; Evercare, which has been part of TPG since 2019; and TPG NEXT, which made its first balance sheet investments in 2019 and launched in 2023.
Reflecting an enduring commitment to build strong, sustainable companies, we first adopted our Global ESG Performance Policy in 2012, became a signatory to the UN Principles for Responsible Investment in 2013, became a supporter of the Taskforce on Climate-Related Financial Disclosures in 2019, and are a supporter of the Sustainability Accounting Standards Board (SASB, now part of IFRS Foundation).
Reflecting an enduring commitment to build strong, sustainable companies, we adopted our first ESG policy in 2012, became a signatory to the UN Principles for Responsible Investment in 2013, became a supporter of the Taskforce on Climate-Related Financial Disclosures in 2019, and are a supporter of the Sustainability Accounting Standards Board (SASB, now part of IFRS Foundation).
TPG Europe has permission to engage in a number of activities regulated under the FSMA, including advising on and arranging deals. Other Jurisdictions Certain other subsidiaries or funds that we advise are registered with, have been licensed by or have obtained authorizations to operate in their respective jurisdictions outside of the United States.
TPG Europe and AG Europe have permission to engage in a number of activities regulated under the FSMA, including advising on and arranging deals. Other Jurisdictions Certain other subsidiaries or funds that we advise are registered with, have been licensed by or have obtained authorizations to operate in their respective jurisdictions outside of the United States.
We seek to ensure that their careers are proactively managed and that they are developed for future opportunities. For our annual performance processes over the last four years, 53% of our promotes below partner level, in addition to 40% of our partner promotes, have been racially or ethnically diverse, gender diverse or identify as LGBTQ+.
We seek to ensure that their careers are proactively managed and that they are developed for future opportunities. For our annual performance processes over the last four years, 53% of our promotes below partner level, in addition to 33% of our partner promotes, have been racially or ethnically diverse, gender diverse or identify as LGBTQ+.
TPG announced the launch of the TPG NEXT fund in 2023 to seed new managers, strengthen their access to capital, offer business building expertise and provide strategic advisory support to talent that is chronically underrepresented in alternative asset management.
TPG announced the launch of the TPG NEXT fund in 2022 to seed new managers, strengthen their access to capital, offer business building expertise and provide strategic advisory support to talent that is chronically underrepresented in alternative asset management.
Partner-sponsored initiatives, such as our Associate Mentoring Program, Women’s Mentoring Program and Diversity Roundtable discussions, 15 Table of Contents are critical ways for us to ensure an inclusive employee experience. With respect to employee development, we proactively build a diverse pipeline at all levels of the firm and actively identify talented diverse employees early in their careers.
Partner-sponsored initiatives, such as our Associate Mentoring Program, Women’s Mentoring Program and Diversity Roundtable discussions, are critical ways for us to ensure an inclusive employee experience. With respect to employee development, we proactively build a diverse pipeline at all levels of the firm and actively identify talented diverse employees early in their careers.
The TPG Operating Group also holds minority interests in certain operating subsidiaries that are consolidated on the TPG Operating Group’s financial statements as “variable interest entities.” See Note 1 1 , “Variable Interest Entities,” to the Consolidated Financial Statements for additional information regarding our variable interest entities.
The TPG Operating Group also holds minority interests in certain operating subsidiaries that are consolidated on the TPG Operating Group’s financial statements as “variable interest entities.” See Note 11 , “Variable Interest Entities,” to the Consolidated Financial Statements for additional information regarding our variable interest entities.
We offer our employees a learning reimbursement stipend to encourage them to apply for certifications and attend classes or conferences related to their role to further their professional growth. We believe our culture of apprenticeship also helps to ensure our employees feel connected to the greater firm as they learn, grow and develop by partnering with their colleagues.
We offer our employees a learning reimbursement stipend to encourage them to apply for certifications and attend classes or conferences related to their role to further their professional growth. 14 Table of Contents We believe our culture of apprenticeship also helps to ensure our employees feel connected to the greater firm as they learn, grow and develop by partnering with their colleagues.
These individuals include current and former chief executive officers, chief financial officers and chairpersons of major corporations, and others holding leading positions of corporations and agencies worldwide. 16 Table of Contents Corporate Social Responsibility We strive to invest in our local communities and engaging our people and other stakeholders in making a meaningful impact, whether through charitable donations or volunteer time.
These individuals include current and former chief executive officers, chief financial officers and chairpersons of major corporations, and others holding leading positions of corporations and agencies worldwide. Corporate Social Responsibility We strive to invest in our local communities and engaging our people and other stakeholders in making a meaningful impact, whether through charitable donations or volunteer time.
Management fees may also be offset by the investment advisers’ receipt of transaction, monitoring or other fees, as described in more detail under “—Transaction, Monitoring and Other Fees” below. Management fees received are generally not subject to clawback. The investment adviser of our TPEP funds generally receives a management fee based on a percentage of the fund’s net asset value.
Management fees may also be offset by the investment advisers’ receipt of transaction, monitoring or other fees, as described in more detail under “Transaction, Monitoring and Other Fees” below. Management fees received are generally not subject to clawback. The investment adviser of our funds generally receives a management fee based on a percentage of the fund’s net asset value.
Dissolution of those funds can typically be accelerated upon a vote of investors (often 75% in interest, with a simple majority sufficing for some funds) not affiliated with us and terminated upon the occurrence of certain other specified events. Ownership interests in most of our private funds are not, however, subject to redemption prior to termination of the funds.
Dissolution of certain of those funds may be accelerated upon a vote of investors (often 75% in interest, with a simple majority sufficing for some funds) not affiliated with us and terminated upon the occurrence of certain other specified events. Ownership interests in most of our private funds are not, however, subject to redemption prior to termination of the funds.
Evercare’s investments are integrated under a common operating platform, The Evercare Group, an integrated healthcare delivery platform in emerging markets across Africa and South Asia, including India, Pakistan, Bangladesh, Kenya and Nigeria. Product: TPG NEXT TPG NEXT is designed to support the next generation of diverse alternative asset managers.
Evercare’s investments are integrated under a common operating platform, The Evercare Group, an integrated healthcare delivery platform in emerging markets across Africa and South Asia, including India, Pakistan, Bangladesh, Kenya and Nigeria. 7 Table of Contents Product: TPG NEXT TPG NEXT is designed to support the next generation of diverse alternative asset managers.
Additional sanctions that may be imposed for failure to comply with applicable requirements include the prohibition of individuals from associating with an investment adviser, the revocation of registrations and other censures and fines. Regulation Under the Investment Company Act We regard ourselves as an alternative asset management firm.
Additional sanctions that may be imposed for failure to comply with applicable requirements include the prohibition of individuals from associating with an investment adviser, the revocation of registrations and other censures and fines. 21 Table of Contents Regulation Under the Investment Company Act We regard ourselves as an alternative asset management firm.
Section 3(c)(7) of the Investment Company Act exempts from the Investment Company Act’s registration requirements investment funds whose securities are owned exclusively by persons that, at the time of acquisition of such securities, are “qualified 18 Table of Contents purchasers” as defined under the Investment Company Act and purchase their interests in a private placement.
Section 3(c)(7) of the Investment Company Act exempts from the Investment Company Act’s registration requirements investment funds whose securities are owned exclusively by persons that, at the time of acquisition of such securities, are “qualified purchasers” as defined under the Investment Company Act and purchase their interests in a private placement.
In order to invest in our people and to foster community, we continue to expand our employee and manager training programs, as described in detail under “—Learning and Engagement Initiatives” below. 14 Table of Contents Learning and Engagement Initiatives Employee Training and Mentorship : We have instituted various “learning initiatives” as a part of our commitment to invest in the development of our employees.
In order to invest in our people and to foster community, we continue to expand our employee and manager training programs, as described in detail under “—Learning and Engagement Initiatives” below. Learning and Engagement Initiatives Employee Training and Mentorship : We have instituted various “learning initiatives” as a part of our commitment to invest in the development of our employees.
Considerations that IRCs take into account when evaluating an investment may include, depending on the nature of the investing business and its strategy, the quality, market position and growth potential of the target company or asset in which the fund proposes to invest, the quality and reputation of the target company’s management team, the sale process for such target company or asset, likely exit strategies and factors that could reduce the value of the target company or asset at exit, the target company or asset’s size and sensitivity to cash flow generation, the portfolio fit and macroeconomic trends in the relevant geographic region or industry.
Considerations involved when evaluating an investment may include, depending on the nature of the investing business and its strategy, the quality, market position and growth potential of the target company or asset in which the fund proposes to invest, the quality and reputation of the target company’s management team, the sale process for such target company or asset, likely exit strategies and factors that could reduce the value of the target company or asset at exit, the target company or asset’s size and sensitivity to cash flow generation, the portfolio fit and macroeconomic trends in the relevant geographic region or industry.
We have in place certain procedures to allocate investment opportunities among our funds in a way that complies with our duties as managers of the applicable funds and that we believe is equitable, fair and in the best interests of the applicable funds. Our investment professionals are actively involved in the investment process.
We have in place certain procedures to allocate investment opportunities among our funds in a way that complies with our duties as managers of the applicable funds and that we believe is equitable, fair and in the best interests of the applicable funds. 16 Table of Contents Our investment professionals are actively involved in the investment process.
These registrations, licenses or authorizations relate to providing investment advice, marketing of securities and other regulated activities. Failure to comply with the laws and regulations governing these subsidiaries and funds that have been registered, licensed or authorized could expose us to liability and/or damage our reputation. 22 Table of Contents In Singapore, both TPG Capital (S) Pte.
These registrations, licenses or authorizations relate to providing investment advice, marketing of securities and other regulated activities. Failure to comply with the laws and regulations governing these subsidiaries and funds that have been registered, licensed or authorized could expose us to liability and/or damage our reputation. In Singapore, TPG Capital (S) Pte.
In addition, our investment professionals and portfolio operations teams work directly with our portfolio company senior executives to identify opportunities to drive operational efficiencies and growth.
In addition, where applicable, our investment professionals and portfolio operations teams work directly with our portfolio company senior executives to identify opportunities to drive operational efficiencies and growth.
The governing agreements of many of our funds also provide that investors have the right to terminate the investment period for any reason by a vote of 75% of the interests in such fund (with some funds only requiring a simple majority).
The governing agreements of certain funds also provide that investors have the right to terminate the investment period for any reason by a vote of 75% of the interests in such fund (with some funds only requiring a simple majority).
To access these filings, go to the “SEC Filings” portion of our “Shareholders” page on our website. You may also access the reports and other documents we file with the SEC at a website maintained by the SEC at www.sec.gov.
To access these filings, go to the “SEC Filings” portion of our 23 Table of Contents “Shareholders” page on our website. You may also access the reports and other documents we file with the SEC at a website maintained by the SEC at www.sec.gov.
We have built our firm through over 30 years of successful innovation and organic growth, and we believe that we have delivered attractive risk-adjusted returns to our clients and established a premier investment business focused on the fastest-growing segments of both the alternative asset management industry and the global economy.
We have built our firm through more than 30 years of successful innovation and growth, and believe that we have delivered attractive risk-adjusted returns to our clients and established a premier investment business focused on the fastest-growing segments of both the alternative asset management industry and the global economy.
Our private markets solutions business is organized into two businesses: (1) NewQuest and (2) TPG GP Solutions (“TGS”). NewQuest Capital Partners NewQuest seeks to acquire private equity positions on a secondary basis in underlying portfolio companies whose businesses are substantially based in the Asia Pacific region.
Our private markets solutions business is organized into two businesses: (1) NewQuest and (2) TPG GP Solutions (“TGS”). 11 Table of Contents NewQuest Capital Partners NewQuest seeks to acquire private equity positions on a secondary basis in underlying portfolio companies whose businesses are substantially based in the Asia Pacific region.
As a result, 69% of global new hires that we recruited during each of the years ended December 31, 2022 and 2021 are racially or ethnically diverse, gender diverse or identify as LGBTQ+. Employee retention also is a key part of our DEI strategy and efforts.
As a result, 71% and 69% of global new hires that we recruited during each of the years ended December 31, 2023 and 2022, respectively, are racially or ethnically diverse, gender diverse or identify as LGBTQ+. Employee retention also is a key part of our DEI strategy and efforts.
Certain of our investment funds, however, rely on other exemptions from the Investment Company Act or register as investment companies under the Investment Company Act.
Certain of our investment funds, however, rely on other exemptions from the Investment Company Act or register as investment companies or business development companies under the Investment Company Act.
The regulatory and legal requirements that apply to our activities are subject to change from time to time and may become more 20 Table of Contents restrictive, which may make compliance with applicable requirements more difficult or expensive or otherwise restrict our ability to conduct our business activities in the manner in which they are now conducted.
The regulatory and legal requirements that apply to our activities are subject to change from time to time and may become more restrictive, which may make compliance with applicable requirements more difficult or expensive or otherwise restrict our ability to conduct our business activities in the manner in which they are now conducted.
TPG NEXT aims to increase the number of diverse-led firms in alternative assets, furthering an effort we began in 2019 with our investments in Harlem Capital, VamosVentures and Landspire.
TPG NEXT began investing in 2023 and aims to increase the number of diverse-led firms in alternative assets, furthering an effort we began in 2019 with our investments in Harlem Capital and VamosVentures.
Regulation as a Real Estate Investment Trust TRTX has elected and qualified to be taxed as a REIT under the U.S. Internal Revenue Code of 1986, as amended (the “Code”).
Regulation as a Real Estate Investment Trust TRTX and MITT have elected and qualified to be taxed as a REIT under the U.S. Internal Revenue Code of 1986, as amended (the “Code”).
In the Cayman Islands, NewQuest Holdings (Cayman) Limited is registered with the Cayman Islands Monetary Authority as a registered person and is authorized to conduct securities investment business, and each of the TPEP “master funds,” as well as each of the TPEP “offshore feeders,” is registered with the Cayman Islands Monetary Authority under the Mutual Funds Law.
In the Cayman Islands, NewQuest Holdings (Cayman) Limited is registered with the Cayman Islands Monetary Authority as a registered person under the Securities Investment Business Act (As Revised) of the Cayman Islands and is authorized to conduct certain securities investment business activities, and each of the TPEP “master funds,” as well as each of the TPEP “offshore feeders,” is registered with the Cayman Islands Monetary Authority under the Mutual Funds Law.
Both at such meetings and in other discussions with the deal team, our partners and other investment professionals will direct the deal team on terms, strategy, process and other important considerations. Existing investments are reviewed and monitored on a regular basis by investment professionals and with routine portfolio company performance reporting to senior leaders of the applicable platforms.
Both at such meetings and in other discussions with the deal team, the applicable investment review committee will direct our investment professionals on terms, strategy, process and other important considerations. Existing investments are reviewed and monitored on a regular basis by investment professionals and with routine investment performance reporting to senior leaders of the applicable platforms.
Employee Ownership: Across our investing platforms, a range of our portfolio companies have established incentive profit-sharing programs to create economic opportunity for employees and deliver recruiting, retention and productivity benefits to companies. In 2022, we became a founding member of Ownership Works, a non-profit advancing and implementing shared ownership programs.
Employee Ownership: Across our investing platforms, a range of our portfolio companies have established incentive profit-sharing programs to create economic opportunity for employees and deliver recruiting, retention and productivity benefits to companies. In 2022, we became a founding member of Ownership Works, a non-profit advancing shared ownership programs, and continue to implement Ownership Works programs in our portfolio where appropriate.
United States Regulation as an Investment Adviser Certain of our subsidiaries are registered with the SEC as investment advisers under the Advisers Act, including TPG Global Advisors, LLC, TPG Capital Advisors, LLC, TPG PEP Advisors, LLC, TPG Real Estate Advisors, LLC, TPG RE Finance Trust Management, L.P., TPG Solutions Advisors, LLC and the subsidiaries that are relying advisers and rely on umbrella registration to be registered as investment advisers with the SEC.
United States Regulation as an Investment Adviser Certain of our subsidiaries are registered with the SEC as investment advisers under the Advisers Act, including TPG Global Advisors, LLC, TPG Capital Advisors, LLC, TPG PEP Advisors, LLC, TPG Real Estate Advisors, LLC, TPG RE Finance Trust Management, L.P., TPG Solutions Advisors, LLC, Angelo Gordon & Co., L.P., AGTB Fund Manager, LLC, and the subsidiaries that are relying advisers and rely on umbrella registration to be registered as investment advisers with the SEC.
Performance allocations are generally calculated on a realized basis, and each general partner (or affiliate) is typically entitled to an allocation of 20% of the net realized profits (also taking into account, among other things, unrealized losses) generated by such fund. Net realized income or loss is not netted between or among funds.
Performance allocations are generally calculated on a realized basis, and each general partner (or affiliate) is typically entitled to an allocation of 20% of the net realized profits (also taking into account, among other things, unrealized losses) generated by such fund.
With an investment team of approximately 30 professionals and $2.9 billion in assets under management, NewQuest is principally focused on complex secondary transactions. TPG GP Solutions Established in 2021, TGS was created to invest in high-quality private equity assets, which are principally based in North America and Europe, in partnership with third-party general partners.
With an investment team of approximately 30 professionals and $3.0 billion in assets under management as of December 31, 2023, NewQuest is principally focused on complex secondary transactions. TPG GP Solutions Established in 2021, TGS was created to invest in high-quality private equity assets, which are principally based in North America and Europe, in partnership with third-party general partners.
Our private investment funds typically have a term of ten years or more, subject to the potential for two one-year extensions with investor consent.
Our private investment funds typically have a term of six to ten years or more, subject to the potential for extensions with investor consent.
In addition, large institutional investors and sovereign wealth funds have begun to develop their own in-house investment capabilities and may compete against us for investment opportunities. Legal and Compliance Our legal and compliance team includes over 30 attorneys, compliance professionals and paralegals.
In addition, large institutional investors and sovereign wealth funds have begun to develop their own in-house investment capabilities and may compete against us for investment opportunities. 20 Table of Contents Legal and Compliance Our legal and compliance team includes over 80 attorneys, compliance professionals and paralegals.
After discussing the proposed deal with the deal team, the IRC will decide whether to give its preliminary approval to the deal team to continue evaluating and performing diligence on such potential investments and will direct the team on conveying necessary terms. The IRC will typically conduct several meetings to consider a particular deal.
After discussing the proposed deal with the deal team, the applicable investment review committee will decide whether to give its preliminary approval to the deal team to continue evaluating and performing diligence on such potential investments and will direct the team on conveying necessary terms. The applicable investment review committee may conduct several meetings to consider a particular deal.
Our compliance policies and procedures address a variety of regulatory and compliance risks such as the handling of material non-public information, personal securities trading, anti-bribery, valuation of investments, document retention, potential conflicts of interest and the allocation of investment opportunities. We generally operate without information barriers between our businesses.
Our compliance policies and procedures address a variety of regulatory and compliance risks such as the handling of material non-public information, personal securities trading, anti-bribery, valuation of investments, document retention, potential conflicts of interest and the allocation of investment opportunities.
We and our affiliates generally also make a commitment to our funds, with this commitment typically ranging from 2% to 5% of the fund’s total limited partner capital commitments. Fund commitments are generally available for investment and other fund purposes during what we call the investment period or commitment period, which typically runs six or fewer years for each fund.
We and our affiliates generally also make a commitment to our funds, which can be as much as 5% of the fund’s total limited partner capital commitments. Fund commitments are generally available for investment and other fund purposes during what we call the investment period or commitment period, which typically runs six or fewer years for each fund.
They are the key to our culture of integrity, innovation and collaboration. We aim to foster a welcoming and inclusive work environment with opportunities for growth and development to attract and retain a high-performing team.
Our people are one of our core strengths and principal reasons for our success. They are the key to our culture of integrity, innovation and collaboration. We aim to foster a welcoming and inclusive work environment with opportunities for growth and development to attract and retain a high-performing team.
Product: TPG Rise Climate TPG Rise Climate is our dedicated climate impact investing product. TPG Rise Climate has raised $7.3 billion in total commitments, and is innovative in matching significant capital from traditional limited partners with over $2.4 billion in commitments from 28 leading global corporations.
TPG Rise Climate has raised $7.3 billion in total commitments, and is innovative in matching significant capital from traditional limited partners with over $2.6 billion in commitments from 28 leading global corporations.
Incentive Arrangements and Fee Structure Management Fees A fund’s investment adviser generally receives a management fee based on a percentage of the fund’s capital commitments, or the fund’s invested capital, depending on the fund’s terms and stage in its lifecycle.
Incentive Arrangements and Fee Structure Management Fees A fund’s investment adviser generally receives a management fee based on a percentage of the fund’s capital commitments, or the fund’s invested capital, funded commitments, cost of investments or Net Asset Value (“NAV”), depending on the fund’s terms and stage in its lifecycle.
The following table presents AUM over the last five years: Assets Under Management ($ in Billions) 2018 $ 80 2019 85 2020 90 2021 114 2022 135 As of December 31, 2022, we employed approximately 1,110 people, including more than 380 investment and operations professionals, in offices across 8 countries providing us with a substantial global footprint and network.
The following table presents AUM over the last five years: Assets Under Management ($ in Billions) 2019 $ 85 2020 90 2021 114 2022 135 2023 222 As of December 31, 2023, we employed approximately 1,850 people, including over 650 investment and operations professionals, in offices across 16 countries, providing us with a substantial global footprint and network.
In the last 12 months, the product has generated value creation of 21%. 5 Table of Contents Platform: Impact Our multi-fund Impact platform pursues both competitive financial returns and measurable societal benefits at scale, harnessing the diverse skills of a differentiated group of stakeholders: • Y Analytics: A public benefit organization that is wholly owned by TPG and which we founded to provide impact research and rigorous assessment measures for impact investments, and today functions as TPG’s firm-wide ESG and impact performance arm • The Global Advisory Board (Founders Board): A group of experienced investors and global thought leaders with a deep personal and professional commitment to driving social and environmental change • The Climate Coalition: A partnership between TPG and 28 leading global corporations to identify and share best practices for considering climate solutions investment opportunities through TPG Rise Climate Based on our investment strategy, we believe our impact investments can deliver profit and positive impact in tandem.
Platform: Impact Our multi-fund Impact platform pursues both competitive financial returns and measurable societal benefits at scale, harnessing the diverse skills of a differentiated group of stakeholders: • Y Analytics: A public benefit organization that is wholly owned by TPG and which we founded to provide impact research and rigorous assessment measures for impact investments, and today functions as TPG’s firm-wide ESG and impact performance arm. • The TPG Rise Global Advisory Board: A group of experienced investors and global thought leaders with a deep personal and professional commitment to driving social and environmental change. • The TPG Rise Climate Coalition: A partnership between TPG and 28 leading global corporations to identify and share best practices for considering climate solutions investment opportunities through TPG Rise Climate.
Item 1. Business Overview TPG is a leading global alternative asset manager with $135.0 billion in assets under management (“AUM”) as of December 31, 2022.
Item 1. Business Overview TPG is a leading global alternative asset manager with $221.6 billion in assets under management (“AUM”) as of December 31, 2023.
The firm hosts a wide range of volunteering opportunities, including serving meals at local shelters, mentoring local students, and building and coordinating delivery of care packages to U.S. troops. Additionally, we participate in corporate sponsorships and partnerships and offer a donation matching program.
The firm hosts a wide range of volunteering opportunities, including serving meals at local shelters, mentoring local students, and building and coordinating delivery of care packages to U.S. troops. Additionally, we participate in corporate sponsorships and partnerships and offer a donation matching program. At a firm level, we have focused much of our civic engagement on our commitment to equality.
Generally, they directly or indirectly lead with identifying, evaluating, structuring, performing diligence, conveying terms, executing, monitoring and exiting investments, as well as pursuing operational improvements in our funds’ portfolio companies. Deal teams strive to be creative and look for deals in which we can leverage our competitive advantages and sector and geographical experience.
Generally, they directly or indirectly lead with identifying, evaluating, structuring, performing diligence, conveying terms, executing, monitoring and exiting investments. We strive to be creative and look for deals in which we can leverage our competitive advantages and sector and geographical experience.
Climate Change Action: We have long recognized the importance of considering the opportunities and financially material risks posed by climate change. Our climate strategy includes understanding our firm-wide operational and financed emissions and physical and transition-related risks in our portfolio.
Climate Change Action: We have long recognized the importance of considering the opportunities and financially material risks posed by climate change. Our climate strategy includes understanding our firm-wide operational and financed emissions and physical and transition-related risks in our portfolio. We have analyzed, verified and publicly reported our firm-wide operational emissions for each year since 2019.
In furtherance of our goal of developing an inclusive workforce, over the past few years we have held firmwide training on unconscious bias, allyship, harassment awareness and prevention. Our harassment awareness and prevention training also covers protocols for bystander intervention. We believe that external learning opportunities also benefit our employees and foster our culture of continuous learning.
In furtherance of our goal of developing an inclusive workforce, over the past few years we have held firmwide training on unconscious bias, allyship, harassment awareness and prevention. Our harassment awareness and prevention training also covers protocols for bystander intervention.
In addition to investment-specific support, Y Analytics leads our ESG Strategy Council, which is comprised of senior members from multiple functions that touch ESG issues, including Legal and Compliance, Human Capital and Operations. Our ESG objectives are also supported by our cross-functional Diversity, Equity and Inclusion Council and Cybersecurity Steering Committee.
In addition to investment-specific support, Y Analytics leads our ESG Strategy Council, which is comprised of members of our investment teams as well as representatives from Y Analytics and multiple other functions, including Legal and Compliance, Human Capital and Operations. Our commitment to ESG is also supported by our cross-functional Diversity, Equity and Inclusion Council and Cybersecurity Steering Committee.
In addition, we believe TPG Inc. is not an investment company under section 3(b)(1) of the Investment Company Act because it is primarily engaged in a non-investment company business.
Accordingly, we do not believe TPG Inc. is an inadvertent investment company by virtue of the 40% test in section 3(a)(1)(C). In addition, we believe TPG Inc. is not an investment company under section 3(b)(1) of the Investment Company Act because it is primarily engaged in a non-investment company business.
ESG matters are brought before our board of directors on a periodic basis. We also advance ESG and impact-related priorities through firm initiatives and investment-related actions, including: Portfolio Board Diversity: Consistent with our core value of promoting diversity, equity and inclusion, we have advanced the diversity of our portfolio company boards in terms of gender, race, ethnicity and sexual orientation.
ESG matters are brought before our board of directors on a periodic basis. We also seek to advance ESG and impact-related priorities through firm initiatives and investment-related actions, including: Portfolio Board Diversity: Consistent with our core value of promoting diversity, equity and inclusion, we support the diversity of our portfolio company boards.
In Hong Kong, TPG Capital, Limited is licensed and authorized by the Hong Kong Securities and Futures Commission to engage in the business of dealing in securities and advising on securities, and NewQuest Capital Advisors (HK) Limited is licensed and authorized to engage in the business of asset management.
In Hong Kong, TPG Capital, Limited is licensed and authorized by the Hong Kong Securities and Futures Commission to engage in the business of dealing in securities and advising on securities, and Angelo, Gordon Hong Kong Limited is licensed and authorized by the Hong Kong Securities and Futures Commission to engage in the business of dealing in securities.
Our Growth platform provides us with a flexible mandate to capitalize on investment opportunities that are earlier in their life cycle, are smaller in size and/or have different profiles than would be considered for our Capital platform. Our family of growth funds now accounts for $23.1 billion in assets under management.
Our Growth platform provides us with a flexible mandate to capitalize on investment opportunities that are earlier in their life cycle, are smaller in size and/or have different profiles than would be considered for our Capital platform.
Our deal teams perform significant research into each prospective investment, including a review of the Company’s performance, projection, market position, financial statements, comparisons of other public and private companies and comparative transactions and relevant industry and market data.
Our investment professionals perform significant research into each prospective investment, including, based on the type of investment a review of the prospective investment’s performance, projection, market position, capital structure, financial statements, comparisons of other public and private companies and comparative transactions and relevant industry and market data.
In the last 12 months, the product has generated value creation of 1%. Product: TPG Real Estate Thematic Advantage Core-Plus TPG Real Estate Thematic Advantage Core-Plus (“TAC+”) is an extension of our opportunistic real estate investment program. TAC+ targets investments in stabilized (or near stabilized) high-quality real estate, particularly in thematic sectors where we have gained significant experience and conviction.
Product: TPG Real Estate Thematic Advantage Core-Plus TPG Real Estate Thematic Advantage Core-Plus (“TAC+”), with $1.7 billion in assets under management, is an extension of our opportunistic real estate investment program. TAC+ targets investments in stabilized (or near stabilized) high-quality real estate, particularly in thematic sectors where we have gained significant experience and conviction.
Ltd. and NewQuest Advisors (Singapore) Pte. Ltd. hold a capital market services license and are authorized by the Monetary Authority of Singapore to conduct fund management activities.
Ltd. holds a capital market services license and is authorized by the Monetary Authority of Singapore to conduct fund management activities.
TREP utilizes a distinct theme-based strategy for sourcing and executing proprietary investments and, over time, many of these themes have aligned with TPG’s broader thematic sector expertise, particularly those pertaining to the healthcare and technology sectors. Since inception, TREP has invested $7.3 billion, achieving a gross IRR of 24% and a net IRR of 17%.
TREP utilizes a distinct theme-based strategy for sourcing and executing proprietary investments and, over time, many of these themes have aligned with TPG’s broader thematic sector expertise, particularly those pertaining to the healthcare and technology sectors.
We do not deduct these purchased credits from our reported emissions. 13 Table of Contents We also provide support to investment professionals and certain portfolio companies regarding climate resilience and decarbonization aligned with their business strategies – either through direct advisory support or through reference to our external network of advisors and consultants.
We also provide support to investment professionals and certain portfolio companies regarding climate resilience and decarbonization aligned with their business strategies – either through direct advisory support or through reference to our external network of advisors and consultants.
In addition, the governing agreements of many of our funds provide that in the event certain “key persons” do not devote the requisite time and attention, then the fund’s commitment period will generally be automatically suspended for 60 days and then terminate unless a majority in interest of the fund’s investors elect to continue the commitment period.
In addition, the governing agreements of many of our funds provide that in the event certain “key persons” do not devote the requisite time and attention, then the fund’s commitment period will generally be automatically suspended for a period of time, typically 60 or 90 days, and, depending on the fund’s governing documents, may be terminated unless a majority in interest of the fund’s investors elect to continue the commitment period or an appropriate successor is approved by the fund’s advisory committee.
We have recorded a contingent repayment obligation of $58.3 million as of December 31, 2022, equal to the amount that would be due if the various funds were liquidated at their current carrying value. For additional information concerning the clawback obligations we could face, see “Item 1A.
We have recorded a contingent repayment obligation of $58.3 million as of December 31, 2023, equal to the amount that would be due if the various funds were liquidated at their current carrying value.
Today, we are investing in real estate through three primary products: (1) TPG Real Estate Partners, (2) TPG Real Estate Thematic Advantage Core-Plus and (3) TPG RE Finance Trust, Inc.
We invest in real estate through four primary products: (1) TPG Real Estate Partners, (2) TPG Real Estate Thematic Advantage Core-Plus, (3) TPG RE Finance Trust, Inc. and (4) TPG Real Estate Credit Opportunities.
Through our capital markets activities, we generate underwriting, placement, arrangement, structuring and advisory fee revenue. In 2022 and 2021, our capital markets business drove $106.0 million and $91.0 million in transaction revenue, respectively.
Through our capital markets activities, we generate underwriting, placement, arrangement, structuring and advisory fee revenue. In 2023, 2022 and 2021, our capital markets business drove $113.1 million, $117.4 million and $104.9 million in transaction revenue, respectively.
TGS brings a primary private equity approach to the general partner-led secondaries market that leverages the TGS team’s deep investing experience and the insights and expertise of the broader TPG ecosystem.
TGS brings a primary private equity approach to the general partner-led secondaries market that leverages the TGS team’s deep investing experience and the insights and expertise of the broader TPG ecosystem. Organizational Structure The following diagram provides a simplified illustration of our organizational structure as of December 31, 2023.
In an effort to manage possible risks resulting from our decision not to implement these barriers, we maintain a list of issuers for which we have access to material, non-public information and in whose securities our funds and investment professionals are not permitted to trade.
In an effort to manage possible risks relating to the receipt of material, non-public information and our decision not to implement information barriers among many investment platforms, we maintain a list of issuers applicable to each side of an information barrier for which we have access to material, non-public information and in whose securities the funds, accounts and investment professionals on that side of the information barrier are not permitted to trade.
Decreases in the net asset value of investor’s capital accounts may reduce the total management fee paid for the relevant period, but generally not the fee rate. Management fees received by TPEP’s investment adviser are also not subject to clawback.
Decreases in the net asset value of investor’s capital accounts may reduce the total management fee paid for the relevant period, but generally not the fee rate.
As of December 31, 2022, we have approximately 1,110 full-time employees, including over 380 investment and operations professionals, over 500 non-investment and fundraising professionals, and more than 170 support staff, located in offices across Asia, Australia, Europe and North America.
As of December 31, 2023, we have approximately 1,850 full-time employees, including over 650 investment and operations professionals, over 970 non-investment and fundraising professionals, and more than 200 support staff, located in offices across Asia-Pacific, Europe, the Middle East, and North America.
We believe that we have a distinctive business approach as compared to other alternative asset managers and a diversified, innovative array of investment platforms that position us well to continue generating sustainable growth across our business. From inception through December 31, 2022, our traditional private equity funds have generated a 22% gross IRR and a 14% net IRR.
We believe that we have a distinctive business approach as compared to other alternative asset managers and a diversified, innovative array of investment platforms that position us well to continue generating sustainable growth across our business.
The strength of our investment performance and our ability to innovate within our business have led to consistent historical growth in our assets under management, all on a scaled infrastructure that gives our business a high degree of operating leverage. From 2018 to December 31, 2022, our assets under management have grown 68.8% from $80.0 billion to $135.0 billion.
The strength of our investment performance, our ability to innovate within our business and our focus on strategic, inorganic growth has led to consistent historical growth in our assets under management, all on a scaled infrastructure that gives our business a high degree of operating leverage.
Therefore, we believe that less than 40% of TPG Inc.’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis comprise assets that could be considered investment securities. Accordingly, we do not believe TPG Inc. is an inadvertent investment company by virtue of the 40% test in section 3(a)(1)(C).
We do not believe TPG Inc.’s interests in these units or the general partners are investment securities. Therefore, we believe that less than 40% of TPG Inc.’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis comprise assets that could be considered investment securities.
Financial Conduct Authority (“FCA”) under the Financial Services and Markets Act 2000 (the “FSMA”). The FSMA and related rules, including the FCA’s rules and guidance, govern most aspects of investment business, including provision of investment advice, use and safekeeping of client funds and securities, regulatory capital, record-keeping, approval standards for individuals, anti-money laundering and periodic reporting.
The FSMA and related rules, including the FCA’s rules and guidance, govern most aspects of investment business, including provision of investment advice, use and safekeeping of client funds and securities, regulatory capital, record-keeping, approval standards for individuals, anti-money laundering and periodic reporting. The FCA is responsible for administering these requirements and our compliance with the FSMA and related rules.
After that time, commitments may be used for follow-on investments and other fund purposes. Generally, as each investment is realized, these funds first return the capital related to that investment, any previously realized or written down investments and certain fund expenses to fund investors and the general partner.
For most of our historic TPG funds, as each investment is realized, these funds first return the capital related to that investment, any previously realized or written down investments and certain fund expenses to fund investors and the general partner.
Product: TPG RE Finance Trust, Inc. TPG RE Finance Trust, Inc. (NYSE: TRTX) (“TRTX”) is externally-managed by an affiliate of TPG and directly originates, acquires and manages commercial mortgage loans and other commercial real estate-related debt instruments in North America for its balance sheet.
(NYSE: TRTX) (“TRTX”) is externally-managed by an affiliate of TPG and directly originates, acquires and manages commercial mortgage loans and other commercial real estate-related debt instruments in North America for its balance sheet. The platform’s objective is to provide attractive risk-adjusted returns to its stockholders over time through cash distributions.
The clawback obligation operates with respect to a given fund’s own net investment performance only, 19 Table of Contents and performance allocations of other funds are not netted for determining this contingent obligation.
This is known as a “clawback” obligation. To the extent we are required to fulfill a clawback obligation, we may decrease the amount of our dividends to our stockholders. The clawback obligation operates with respect to a given fund’s own net investment performance only, and performance allocations of other funds are not netted for determining this contingent obligation.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn order to ensure adequate distributions of performance allocations are available under the new program during a three-year transition period following the IPO, we can increase the distributions of performance allocations that would otherwise be made under the program by up to $40 million per year by commensurately reducing the performance allocation that would otherwise be distributable to RemainCo, if the amount otherwise available under the new discretionary performance allocation program is less than $120 million and $130 million in calendar years 2023 and 2024, respectively.
Biggest changeIf in 2024 the amount otherwise available under the new discretionary performance allocation program is less than $130 million, our Chief Executive Officer (“CEO”) can determine to increase the performance allocations available under our performance allocation program by an amount equal to the shortfall plus $10 million (which we refer to as a “Performance Allocation Increase”), but by no more than $40 million, by allocating amounts that would have otherwise been distributable to RemainCo.
In the ordinary course of our business, we collect, store a range of data, including our proprietary business information and intellectual property, and personally identifiable information of our employees, our fund investors and other third parties, in our cloud applications and on our networks, as well as our service providers’ systems.
In the ordinary course of our business, we collect and store a range of data, including our proprietary business information and intellectual property, and personally identifiable information of our employees, our fund investors and other third parties, in our cloud applications and on our networks, as well as our service providers’ systems.
Shared investments. We expect more than one of our funds to make investments in the same portfolio company from time to time. In many such cases, the funds will co-invest lockstep, with both funds making and exiting the shared investment at the same time and on substantially the same terms.
Shared investments. We expect more than one of our funds to make investments in the same portfolio company from time to time. In many such cases, the funds will co-invest in lockstep, with both funds making and exiting the shared investment at the same time and on substantially the same terms.
Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the Internal Revenue Service (“IRS”) makes audit adjustments to the TPG Operating Group’s federal income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from the applicable TPG Operating Group partnership.
Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the Internal Revenue Service (“IRS”) makes audit adjustments to the TPG Operating Group’s federal income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from the TPG Operating Group partnership.
Although we expect to pay at least 85% of our DE as a dividend, the percentage of our DE paid out as a dividend could fall below that target minimum.
Although we expect to pay at least 85% of our DE as a dividend, the percentage of our DE paid out as a dividend could fall below that target minimum.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of the Company; (ii) action asserting a claim of breach of a fiduciary duty owed by or other wrongdoing by any current or former director, officer, employee, agent or stockholder of the Company to the Company or the Company’s stockholders; (iii) action asserting a claim arising under any provision of the DGCL or our amended and restated certificate of incorporation or our bylaws (as either may be amended from time to time), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (iv) action asserting a claim governed by the internal affairs doctrine.
Our restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of the Company; (ii) action asserting a claim of breach of a fiduciary duty owed by or other wrongdoing by any current or former director, officer, employee, agent or stockholder of the Company to the Company or the Company’s stockholders; (iii) action asserting a claim arising under any provision of the DGCL or our restated certificate of incorporation or our bylaws (as either may be amended from time to time), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (iv) action asserting a claim governed by the internal affairs doctrine.
If a TPG Operating Group partnership were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we and the TPG Operating Group partnership might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
If the TPG Operating Group partnership were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we and the TPG Operating Group partnership might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
A variety of factors could exacerbate the competitive risks we face, including: • fund investors may reduce their investments in our funds or decrease their allocations in new funds based on a variety of factors, such as the occurrence of an economic downturn, their available capital, regulatory requirements or a desire to consolidate their relationships with investment firms; 70 Table of Contents • some of our competitors may have agreed, or may agree, to terms on their funds or products that are more favorable to fund investors than those of our funds or products, such as lower management fees, greater fee sharing or higher hurdles for performance allocations, and we may be unable to match or otherwise revise our terms; • some of our funds may not perform as well as competitors’ funds or other available investment products; • some of our competitors may have raised, or may raise, significant amounts of capital and may have similar investment objectives and strategies to our funds, which could create additional competition for investment opportunities and reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; • some of our competitors may have a lower cost of capital and access to funding sources that are not available to us; • some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and bid more aggressively than us for investments; • some of our competitors may be subject to less regulation or less regulatory scrutiny and, accordingly, may have more flexibility to undertake and execute certain businesses or investments than we do and/or bear less expense to comply with such regulations than we bear; • there are relatively few barriers to entry impeding the formation of new funds, including a relatively low cost of entering these businesses, and the successful efforts of new entrants into our various lines of business have resulted, and may continue to result, in increased competition; • if, as we expect, allocation of assets to alternative investment strategies increases, there may be increased competition for alternative investments and access to fund general partners and managers; • some of our competitors may have instituted, or may institute, low cost, high speed financial applications and services based on artificial intelligence, and new competitors may enter the investment management space using new investment platforms based on artificial intelligence; • some investors may prefer to pursue investments directly instead of investing through one of our funds; • some investors may prefer to invest with an investment manager that is not publicly traded, is smaller or manages fewer investment products; and • other industry participants continuously seek to recruit our investment professionals and other key personnel away from us.
A variety of factors could exacerbate the competitive risks we face, including: • fund investors may reduce their investments in our funds or decrease their allocations in new funds based on a variety of factors, such as the occurrence of an economic downturn, their available capital, regulatory requirements or a desire to consolidate their relationships with investment firms; 74 Table of Contents • some of our competitors may have agreed, or may agree, to terms on their funds or products that are more favorable to fund investors than those of our funds or products, such as lower management fees, greater fee sharing or higher hurdles for performance allocations, and we may be unable to match or otherwise revise our terms; • some of our funds may not perform as well as competitors’ funds or other available investment products; • some of our competitors may have raised, or may raise, significant amounts of capital and may have similar investment objectives and strategies to our funds, which could create additional competition for investment opportunities and reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; • some of our competitors may have a lower cost of capital and access to funding sources that are not available to us; • some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and bid more aggressively than us for investments; • some of our competitors may be subject to less regulation or less regulatory scrutiny and, accordingly, may have more flexibility to undertake and execute certain businesses or investments than we do and/or bear less expense to comply with such regulations than we bear; • there are relatively few barriers to entry impeding the formation of new funds, including a relatively low cost of entering these businesses, and the successful efforts of new entrants into our various lines of business have resulted, and may continue to result, in increased competition; • if, as we expect, allocation of assets to alternative investment strategies increases, there may be increased competition for alternative investments and access to fund general partners and managers; • some of our competitors may have instituted, or may institute, low cost, high speed financial applications and services based on artificial intelligence, and new competitors may enter the investment management space using new investment platforms based on artificial intelligence; • some investors may prefer to pursue investments directly instead of investing through one of our funds; • some investors may prefer to invest with an investment manager that is not publicly traded, is smaller or manages fewer investment products; and • other industry participants continuously seek to recruit our investment professionals and other key personnel away from us.
Even if replacement conventions (e.g., SOFR) are adopted in the lending and bond markets, it is uncertain whether they might affect the funds as investors in floating-rate instruments, including by: • affecting liquidity of the funds’ investments in the secondary market and their market value; • reducing the interest rate earned by the funds as holders of such investments (either generally or in certain market cycles) due to the use of a collateralized, overnight rate and credit spread adjustments instead of an unsecured, term rate; or • causing the funds to incur expenses to manage the transition away from LIBOR.
Even if replacement conventions (e.g., SOFR) are widely adopted in the lending and bond markets, it is uncertain whether they might affect the funds as investors in floating-rate instruments, including by: • affecting liquidity of the funds’ investments in the secondary market and their market value; • reducing the interest rate earned by the funds as holders of such investments (either generally or in certain market cycles) due to the use of a collateralized, overnight rate and credit spread adjustments instead of an unsecured, term rate; or • causing the funds to incur expenses to manage the transition away from LIBOR.
Our business is materially affected by conditions in the global financial markets and economic conditions or events throughout the world that are outside of our control, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation and regulations on the financial industry), pandemics or other severe public health events, trade barriers, commodity prices, currency exchange rates and controls, national and international political circumstances (including government shutdowns, wars, terrorist acts or security operations) and the effects of climate change.
Our business is materially affected by conditions in the global financial markets and economic conditions or events throughout the world that are outside of our control, such as fluctuating interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation and regulations on the financial industry), pandemics or other severe public health events, trade barriers, commodity prices, currency exchange rates and controls, national and international political circumstances (including government shutdowns, wars, terrorist acts or security operations) and the effects of climate change.
Moreover, with respect to the historical returns of our funds: • we may create new funds in the future that reflect a different asset mix, different investment strategies and varied geographic and industry exposure compared to our current funds, and any such new funds could have different returns than our existing or previous funds; • the historical returns presented in this report derive largely from the performance of our existing funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed, which may have little or no realized investment track record, may be invested by different investment professionals, and may have lower target returns than our existing funds; • the performance of our funds reflects our valuation of the unrealized investments held in those funds using assumptions that we believe are reasonable under the circumstances, but the actual realized return on these investments will depend on a variety of factors including future operating results and the value of assets and market conditions at the time of disposition, each of which may differ from the assumptions on which the valuations are based, which could negatively impact the ultimate value we realize from those investments; • in recent years, there has been increased competition for investment opportunities resulting from, among other things, the increased amount of capital invested in alternative funds, high liquidity in debt markets and strong equity markets, and increased competition for investments could reduce our returns in the future; • the rates of returns of some of our funds in certain years have been positively influenced by a number of investments that experienced rapid and substantial increases in value following the dates on which those investments were made, which may not occur with respect to future investments; • our funds’ returns in some years have benefited from investment opportunities and general market conditions, including a low interest rate environment, that may not repeat themselves, and our current or future funds may be unable to avail themselves of comparable investment opportunities or market conditions; • market conditions during previous periods may have been significantly more favorable for generating positive performance, particularly in our private equity business, than current market conditions or the market conditions that we may experience in the future; and • newly established funds may generate lower returns during the period that they take to deploy their capital.
Moreover, with respect to the historical returns of our funds: • we may create new funds in the future that reflect a different asset mix, different investment strategies and varied geographic and industry exposure compared to our current funds, and any such new funds could have different returns than our existing or previous funds; • the historical returns presented in this report derive largely from the performance of our existing funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed, which may have little or no realized investment track record, may be invested by different investment professionals, and may have lower target returns than our existing funds; • the performance of our funds reflects our valuation of the unrealized investments held in those funds using assumptions that we believe are reasonable under the circumstances, but the actual realized return on these investments will depend on a variety of factors including future operating results and the value of assets and market conditions at the time of disposition, each of which may differ from the assumptions on which the valuations are based, which could negatively impact the ultimate value we realize from those investments; 34 Table of Contents • in recent years, there has been increased competition for investment opportunities resulting from, among other things, the increased amount of capital invested in alternative funds, high liquidity in debt markets and strong equity markets, and increased competition for investments could reduce our returns in the future; • the rates of returns of some of our funds in certain years have been positively influenced by a number of investments that experienced rapid and substantial increases in value following the dates on which those investments were made, which may not occur with respect to future investments; • our funds’ returns in some years have benefited from investment opportunities and general market conditions, including a low interest rate environment, that may not repeat themselves, and our current or future funds may be unable to avail themselves of comparable investment opportunities or market conditions; • market conditions during previous periods may have been significantly more favorable for generating positive performance, particularly in our private equity business, than current market conditions or the market conditions that we may experience in the future; and • newly established funds may generate lower returns during the period that they take to deploy their capital.
For example, we, our funds and certain of our employees are each exposed to the risks of litigation relating to investment activities of our funds, our SPACs and actions taken by the officers and directors (some of whom may be TPG employees) of portfolio companies, such as lawsuits by other stockholders of our public portfolio companies or holders of debt instruments of companies in which we or our funds have significant investments, including securities class action lawsuits by stockholders, as well as class action lawsuits that challenge our acquisition transactions and/or attempt to enjoin them.
For example, we, our funds and certain of our employees are each exposed to the risks of litigation relating to investment activities of our funds and actions taken by the officers and directors (some of whom may be TPG employees) of portfolio companies, such as lawsuits by other stockholders of our public portfolio companies or holders of debt instruments of companies in which we or our funds have significant investments, including securities class action lawsuits by stockholders, as well as class action lawsuits that challenge our acquisition transactions and/or attempt to enjoin them.
Our amended and restated certificate of incorporation also provides that, unless we consent in writing to an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act or the rules and regulations promulgated thereunder, and that its provisions will not preclude or contract the scope of exclusive federal jurisdiction for suits brought under the Exchange Act or the rules and regulations promulgated thereunder.
Our restated certificate of incorporation also provides that, unless we consent in writing to an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act or the rules and regulations promulgated thereunder, and that its provisions will not preclude or contract the scope of exclusive federal jurisdiction for suits brought under the Exchange Act or the rules and regulations promulgated thereunder.
While we have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have the same effect as Section 203 of the DGCL, except that they provide that the TPG Operating Group, its affiliates, groups that include the TPG Operating Group and certain of their direct and indirect transferees are not deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly are not subject to such restrictions.
While we have elected in our restated certificate of incorporation not to be subject to Section 203 of the DGCL, our restated certificate of incorporation contains provisions that have the same effect as Section 203 of the DGCL, except that they provide that the TPG Operating Group, its affiliates, groups that include the TPG Operating Group and certain of their direct and indirect transferees are not deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly are not subject to such restrictions.
Treasury Department’s Office of Foreign Assets Control (“OFAC”)) and the potential for the imposition of new or additional tariffs; • political hostility to investments by foreign or private equity investors, including increased risk of government expropriation; • reliance on a more limited number of commodity inputs, service providers and distribution mechanisms; • higher rates of inflation; • higher transaction costs; • less government supervision of exchanges, brokers and issuers; • less developed or non-uniform bankruptcy, limited liability company, corporate, partnership and other laws (which may have the effect of disregarding or otherwise circumventing limited liability structures, potentially causing the actions or liabilities of one fund or portfolio company to adversely impact us or an unrelated fund or portfolio company); • difficulty in enforcing contractual obligations; • less stringent requirements relating to fiduciary duties; • fewer investor protections and less publicly available information about a company; • limitations on borrowings to be used to fund acquisitions or dividends; • potential limitations on the deductibility of interest for income tax purposes; • limitations on permissible transaction counterparties or consolidation rules that effectively restrict the types of businesses in which we may invest; • economic and political risks, including potential exchange control regulations, restrictions on repatriation of profits on investments or of capital invested, nationalization, expropriation of assets, confiscatory taxation and political, economic or social instability; and • the imposition of non-U.S. taxes or withholding on income and gains recognized with respect to such securities and potential non-U.S. tax filing requirements.
Treasury Department’s Office of Foreign Assets Control (“OFAC”)) and the potential for the imposition of new or additional tariffs; • political hostility to investments by foreign or private equity investors, including increased risk of government expropriation; • reliance on a more limited number of commodity inputs, service providers and distribution mechanisms; • higher rates of inflation; • higher transaction costs; • less government supervision of exchanges, brokers and issuers; 38 Table of Contents • less developed or non-uniform bankruptcy, limited liability company, corporate, partnership and other laws (which may have the effect of disregarding or otherwise circumventing limited liability structures, potentially causing the actions or liabilities of one fund or portfolio company to adversely impact us or an unrelated fund or portfolio company); • difficulty in enforcing contractual obligations; • less stringent requirements relating to fiduciary duties; • fewer investor protections and less publicly available information about a company; • limitations on borrowings to be used to fund acquisitions or dividends; • potential limitations on the deductibility of interest for income tax purposes; • limitations on permissible transaction counterparties or consolidation rules that effectively restrict the types of businesses in which we may invest; • economic and political risks, including potential exchange control regulations, restrictions on repatriation of profits on investments or of capital invested, nationalization, expropriation of assets, confiscatory taxation and political, economic or social instability; and • the imposition of non-U.S. taxes or withholding on income and gains recognized with respect to such securities and potential non-U.S. tax filing requirements.
We have agreed with GP LLC that the TPG Operating Group partnerships will not make any elections that would result in the IRS pursuing the partners of such partnerships for such taxes owed for periods ending on or prior to December 31, 2021 without consent of (i) a majority of the holders of Common Units and (ii) TPG Group Holdings.
We have agreed with GP LLC that the TPG Operating Group partnership will not make any elections that would result in the IRS pursuing the partners of such partnerships for such taxes owed for periods ending on or prior to December 31, 2021 without consent of (i) a majority of the holders of Common Units and (ii) TPG Group Holdings.
Between the second and third anniversary of the IPO, the TPG Partner Vehicles and the TPG partners may transfer or exchange up to 33.33% of their Class A common stock, or any shares of Class B common stock or any Common Units owned as of the closing of the IPO, as applicable; between the third and fourth anniversary of the IPO, the TPG Partner Vehicles and the TPG partners may transfer or exchange up to 66.66% of their original holdings of Class A common stock, or any shares of Class B common stock or any Common Units owned as of the closing of the IPO, as applicable; and after the fourth anniversary of the IPO, the TPG Partner Vehicles and the TPG partners may transfer or exchange up to 100% of their original holdings Class A common stock, or any shares of Class B common stock or any Common Units, as applicable (in each case, with respect to Common Units, subject to the terms of the Exchange Agreement (as defined herein)).
Between the second and third anniversary of the IPO, the TPG Partner Vehicles and the TPG partners may transfer or exchange up to 33.33% of their Class A common stock, or any shares of Class B common stock or any Common Units owned as of the closing of the IPO, as applicable; between the third and fourth anniversary of the IPO, the TPG Partner Vehicles and the TPG partners may transfer or exchange up to 66.66% of their original holdings of Class A common stock, or any shares of Class B common stock or any Common Units owned as of the closing of the IPO, as applicable; and after the fourth anniversary of the IPO, the TPG Partner Vehicles and the TPG partners may transfer or exchange up to 100% of their original holdings Class A common stock, or any shares of Class B common stock or any Common Units, as applicable (in each case, with respect to Common Units, subject to the terms of the A&R Exchange Agreement (as defined herein)).
If, as a result of any such audit adjustment, any TPG Operating Group partnership is required to make payments of taxes, penalties and interest, such partnership’s cash available for distributions to us may be substantially reduced. These rules are not applicable to the TPG Operating Group partnerships for tax years beginning on or prior to December 31, 2017.
If, as a result of any such audit adjustment, the TPG Operating Group partnership is required to make payments of taxes, penalties and interest, the partnership’s cash available for distributions to us may be substantially reduced. These rules are not applicable to the TPG Operating Group partnership for tax years beginning on or prior to December 31, 2017.
For the avoidance of doubt, our amended and restated certificate of incorporation also provides that the foregoing exclusive forum provision does not apply to actions brought to enforce any liability or duty created by the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, or any other claim or cause of action for which the federal courts have exclusive jurisdiction.
For the avoidance of doubt, our restated certificate of incorporation also provides that the foregoing exclusive forum provision does not apply to actions brought to enforce any liability or duty created by the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, or any other claim or cause of action for which the federal courts have exclusive jurisdiction.
Some jurisdictions, including each of the U.S. states as well as the EU through the GDPR and the U.K. through the U.K. Data Protection Act, have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data, which would require heightened escalation and notification processes with associated response plans.
Some jurisdictions, including each of the U.S. states, U.S. federal laws, as well as the EU through the GDPR and the U.K. through the U.K. Data Protection Act, have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data, which would require heightened escalation and notification processes with associated response plans.
We anticipate that each TPG Operating Group partnership will be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax (except potentially in the case of an IRS audit). Instead, taxable income will be allocated to holders of Common Units, including us.
We anticipate that the TPG Operating Group partnership will be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax (except potentially in the case of an IRS audit). Instead, taxable income will be allocated to holders of Common Units, including us.
Further, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing investors or fail to attract new investors, as well as discourage others from doing business with us. Some of our funds invest in businesses that operate in highly regulated industries.
Further, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing investors or clients or fail to attract new investors or clients, as well as discourage others from doing business with us. Some of our funds invest in businesses that operate in highly regulated industries.
The success of our growth strategy depends on, among other things: • our ability to correctly identify and create products that appeal to investors; • how our existing fund investors view any new initiatives; • mitigating risks that arise from the diversion of management’s time and attention from our existing businesses; • our ability to properly manage conflicts of interests with our existing businesses; • minimizing any disruption to our ongoing businesses; • management’s ability to develop and integrate new businesses and the success of integration efforts; • our ability to identify and manage risks in new lines of businesses; • our ability to successfully negotiate and enter into beneficial arrangements with new counterparties; • our ability to implement adequate investment processes, controls and procedures that we have already developed around our existing platforms and/or identify and develop new policies, controls and procedures appropriate in light of a new business, product or investment strategy; • our ability to successfully enter into markets or businesses in which we may have limited or no experience; • managing the increased demands on our information systems, operational systems and technology, including related security systems, and infrastructure; • our ability to achieve expected results or realize expected synergies from newly developed products or strategic alliances; • our ability to obtain requisite approvals and licenses from relevant governmental authorities and to comply with applicable laws and regulations without incurring undue costs or delays; and • the broadening of our geographic footprint and successfully managing the risks associated with conducting operations in foreign jurisdictions (including regulatory, tax, legal and reputational consequences).
The success of our growth strategy depends on, among other things: • our ability to correctly identify and create products that appeal to investors; • how our existing fund investors view any new initiatives; • mitigating risks that arise from the diversion of management’s time and attention from our existing businesses; 29 Table of Contents • our ability to properly manage conflicts of interests with our existing businesses; • minimizing any disruption to our ongoing businesses; • management’s ability to develop and integrate new businesses and the success of integration efforts; • our ability to identify and manage risks in new lines of businesses; • our ability to successfully negotiate and enter into beneficial arrangements with new counterparties; • our ability to implement adequate investment processes, controls and procedures that we have already developed around our existing platforms and/or identify and develop new policies, controls and procedures appropriate in light of a new business, product or investment strategy; • our ability to successfully enter into markets or businesses in which we may have limited or no experience; • managing the increased demands on our information systems, operational systems and technology, including related security systems, and infrastructure; • our ability to achieve expected results or realize expected synergies from newly developed products or strategic alliances; • our ability to obtain requisite approvals and licenses from relevant governmental authorities and to comply with applicable laws and regulations without incurring undue costs or delays; and • the broadening of our geographic footprint and successfully managing the risks associated with conducting operations in foreign jurisdictions (including regulatory, tax, legal and reputational consequences).
These strategic partners often have close business relationships with us and provide services that are similar to, and that may overlap with, services we provide to our funds, including sourcing, conducting due diligence on or developing potential investments, as well as structuring, managing, monitoring and disposing of investments.
These strategic partners and operators often have close business relationships with us and provide services that are similar to, and that may overlap with, services we provide to our funds, including sourcing, conducting due diligence on or developing potential investments, as well as structuring, managing, monitoring and disposing of investments.
In addition, in our more recent funds and we expect in future funds, we or one of our subsidiaries have and will guarantee 100% of any clawback obligations. Many of our funds include a segregated reserve account funded by a percentage of performance allocations otherwise distributable to us (typically 10% or less).
In addition, in certain of our more recent funds and we expect in future funds, we or one of our subsidiaries have and will guarantee 100% of any clawback obligations. Many of our funds include a segregated reserve account funded by a percentage of performance allocations otherwise distributable to us (typically 10% or less).
Furthermore, between the one-year and eighteen-month anniversary of the IPO, the Pre-IPO Investors may sell up to 50% of their Class A common stock, Class B common stock or Common Units; between the eighteen-month and second-year anniversary of the IPO, the Pre-IPO Investors may sell up to 75% of their Class A common stock, Class B common stock or Common Units; and after the second-year anniversary, the Pre-IPO Investors may sell 100% of their Class A common stock, Class B common stock or Common Units, in each case, subject to the terms of the Exchange Agreement.
Furthermore, between the one-year and eighteen-month anniversary of the IPO, the Pre-IPO Investors may sell up to 50% of their Class A common stock, Class B common stock or Common Units; between the eighteen-month and second-year anniversary of the IPO, the Pre-IPO Investors may sell up to 75% of their Class A common stock, Class B common stock or Common Units; and after the second-year anniversary, the Pre-IPO Investors may sell 100% of their Class A common stock, Class B common stock or Common Units, in each case, subject to the terms of the A&R Exchange Agreement.
If any TPG Operating Group partnership were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for us and the TPG Operating Group partnership, including as a result of our inability to file a consolidated U.S. federal income tax return with the TPG Operating Group partnership.
If the TPG Operating Group partnership were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for us and the TPG Operating Group partnership, including as a result of our inability to file a consolidated U.S. federal income tax return with the TPG Operating Group partnership.
Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of distributable earnings (“DE”) attributable to the TPG Operating Group, subject to adjustment as determined by the Executive Committee of our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations.
Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of distributable earnings (“DE”) attributable to the TPG Operating Group, subject to adjustment as determined by the our board of directors and, until the Sunset, our Executive Committee, to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations.
To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in any shares of our capital stock shall be deemed to have notice of and consented to the forum provision in our amended and restated certificate of incorporation.
To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in any shares of our capital stock shall be deemed to have notice of and consented to the forum provision in our restated certificate of incorporation.
Further, foreign, state and local governments may continue to enact tax laws in response to the TCJA that could result in further changes to foreign, state and local taxation and have a material adverse effect on our results of operations, financial condition and cash flow.
Further, foreign, state and local governments may enact tax laws in response to the TCJA that could result in further changes to foreign, state and local taxation and have a material adverse effect on our results of operations, financial condition and cash flow.
There is no guarantee that such institutions will continue to extend credit to us or will renew the existing credit agreements we have with them, or that we will be able to refinance our outstanding notes or other obligations when they mature.
There is no guarantee that such financial institutions will continue to extend credit to us or will renew the existing credit agreements we have with them, or that we will be able to refinance our outstanding notes or other obligations when they mature.
Additionally, if such limited availability of financing persists, our funds may also not be able to recoup their investments, as issuers of debt become unable to repay their borrowings, which will affect both their equity and debt investors.
Additionally, if such limited availability of financing persists, our funds may also not be able to recoup their investments, as issuers of debt become unable to repay their borrowings, which will adversely affect both their equity and debt investors.
Investments in non-U.S. securities or companies that are based or have operations in countries outside of the United States, or otherwise generate revenue or have other touchpoints outside of the United States, involve certain factors not typically associated with investing in U.S. companies, including risks relating to: • currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency into another; • less developed or efficient financial markets, which could lead to price volatility and relative illiquidity; • the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; • changes in laws or clarifications to existing laws that could create tax uncertainty; 35 Table of Contents • a less developed legal or regulatory environment, differences in the legal and regulatory environment or enhanced legal and regulatory compliance; • greater levels of bribery, corruption and politically exposed persons; • potential exposure to the U.S.
Investments in non-U.S. securities or companies that are based or have operations in countries outside of the United States, or otherwise generate revenue or have other touchpoints outside of the United States, involve certain factors not typically associated with investing in U.S. companies, including risks relating to: • currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency into another; • less developed or efficient financial markets, which could lead to price volatility and relative illiquidity; • the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; • changes in laws or clarifications to existing laws that could create tax uncertainty; • a less developed legal or regulatory environment, differences in the legal and regulatory environment or enhanced legal and regulatory compliance; • greater levels of bribery, corruption and politically exposed persons; • potential exposure to the U.S.
In addition, different jurisdictions could classify investments made by TPG Rise Climate differently in terms of their sustainability, and thereby could open some assets to so-called transition risks. 72 Table of Contents Difficult economic and market conditions could negatively impact our businesses in many ways, including by reducing the value or hampering the performance of our funds’ investments or reducing our funds’ ability to raise or deploy capital, each of which could have a material adverse effect on our results of operations, financial condition and cash flow.
In addition, different jurisdictions could classify investments made by TPG Rise Climate differently in terms of their sustainability, and thereby could open some assets to so-called transition risks. 76 Table of Contents Difficult economic and market conditions could negatively impact our businesses in many ways, including by reducing the value or hampering the performance of our funds’ investments or reducing our funds’ ability to raise or deploy capital, each of which could have a material adverse effect on our results of operations, financial condition and cash flow.
We have also formed and expect to continue to form relationships with third-party strategic partners so that our funds can take advantage of their expertise, often in particular industries, sectors and/or geographies.
We have also formed and expect to continue to form relationships with third-party strategic partners and operators so that our funds can take advantage of their expertise, often in particular industries, sectors and/or geographies.
Under certain circumstances, exchanges of Common Units pursuant to the Exchange Agreement or other transfers of Common Units could cause a TPG Operating Group partnership to be treated like a publicly traded partnership. From time to time, the U.S.
Under certain circumstances, exchanges of Common Units pursuant to the A&R Exchange Agreement or other transfers of Common Units could cause the TPG Operating Group partnership to be treated like a publicly traded partnership. From time to time, the U.S.
We expect that our primary liquidity needs include cash required to: • continue growing our businesses, including seeding new strategies, pursuing strategic investments or acquisitions, funding our capital commitments made to existing and future funds and co-investments, funding any net capital requirements of our broker-dealer and otherwise supporting investment vehicles that we sponsor; • support our working capital needs; • service debt obligations, including the payment of obligations at maturity, on interest payment dates or upon redemption, as well as any contingent liabilities that may give rise to future cash payments; • fund cash operating expenses, including compensation and contingencies, including for clawback obligations or litigation matters; • pay amounts that may become due under the Tax Receivable Agreement; • pay cash dividends in accordance with our dividend policy for our Class A common stock; • warehouse investments in portfolio companies or other investments for the benefit of one or more of our funds or other investment pending contribution of committed capital by the investors in such vehicles and advance capital to them for other operational needs; • address capital needs of regulated and other subsidiaries, including our broker-dealer; and 65 Table of Contents • exchange Common Units pursuant to the Exchange Agreement or repurchase or redeem other securities issued by us.
We expect that our primary liquidity needs include cash required to: • continue growing our businesses, including seeding new strategies, pursuing strategic investments or acquisitions, funding our capital commitments made to existing and future funds and co-investments, funding any net capital requirements of our broker-dealer and otherwise supporting investment vehicles that we sponsor; • support our working capital needs; • service debt obligations, including the payment of obligations at maturity, on interest payment dates or upon redemption, as well as any contingent liabilities that may give rise to future cash payments; • fund cash operating expenses, including compensation and contingencies, including for clawback obligations or litigation matters; • pay amounts that may become due under the Tax Receivable Agreement; • pay cash dividends in accordance with our dividend policy for our Class A common stock; • warehouse investments in portfolio companies or other investments for the benefit of one or more of our funds or other investment pending contribution of committed capital by the investors in such vehicles and advance capital to them for other operational needs; • address capital needs of regulated and other subsidiaries, including our broker-dealer; and • exchange Common Units pursuant to the A&R Exchange Agreement or repurchase or redeem other securities issued by us.
In particular, compliance with climate- and other ESG-related rules in the EU is expected to result in increased legal and compliance costs and expenses which would be borne by us and our funds.
In particular, compliance with climate- and other ESG-related rules, including in the EU, is expected to result in increased legal and compliance costs and expenses which would be borne by us and our funds.
Our determination of whether to engage a professional as an employee or a consultant can give rise to conflicts of interest because, in general, except with respect to certain in-house, foreign office and specialized operational services, we bear the compensation costs for our employees whereas compensation costs for consultants could be paid by us, a fund or a portfolio company, as described above.
Our determination of whether to engage a professional as an employee or a consultant can give rise to conflicts of interest because, in general, except with respect to certain in-house, foreign office and specialized operational services provided to certain funds, we bear the compensation costs for our employees whereas compensation costs for consultants could be paid by us, a fund or a portfolio company, as described above.
In some cases, the inability of our funds’ investments to refinance or extend maturities may result in the inability of those investments to repay debt at maturity or pay interests when due, and may cause the companies to sell assets, undergo a recapitalization or seek bankruptcy protection, any of which would also likely impair the value of our funds’ investment and lead to a decrease in investment income earned by us. 68 Table of Contents Interest rates on our and our investments’ outstanding financial instruments might be subject to change based on regulatory developments, which could adversely affect our revenue, expenses and the value of those financial instruments.
In some cases, the inability of our funds’ investments to refinance or extend maturities may result in the inability of those investments to repay debt at maturity or pay interests when due, and may cause the portfolio companies to sell assets, undergo a recapitalization or seek bankruptcy protection, any of which would also likely impair the value of our funds’ investment and lead to a decrease in investment income earned by us. 72 Table of Contents Interest rates on our and our investments’ outstanding financial instruments might be subject to change based on regulatory developments, which could adversely affect our revenue, expenses and the value of those financial instruments.
See “—Risks Related to Our Business—We are subject to increasing scrutiny from fund investors and regulators on ESG matters, which may constrain investment opportunities for our funds and negatively impact our ability to raise capital from such investors.” At the portfolio company level, while we have increasingly and substantially sought to invest in sectors that are inherently lower carbon intensity (e.g., technology, healthcare) which decreases transition risk, there are still individual portfolio companies in these and other sectors that could face transition risk if carbon-related regulations or taxes are implemented.
See “—Risks Related to Our Business—We are subject to increasing scrutiny from fund investors and regulators on ESG matters, which may constrain investment opportunities for our funds and negatively impact our ability to raise capital from such investors.” At the portfolio company level, while we have increasingly and substantially sought to invest in sectors that are inherently lower carbon intensity (e.g., technology, healthcare) which decreases some exposure to transition risk, there are still individual portfolio companies in these and other sectors that could face transition risks related to carbon-related regulations or taxes if such measures are implemented.
To the extent we do not timely satisfy an interim clawback obligation, management fees paid to the fund manager will typically be suspended. As of December 31, 2022, $58.3 million of performance allocations were subject to this clawback obligation, assuming that all applicable funds and investments were liquidated at their current unrealized fair values as of December 31, 2022.
To the extent we do not timely satisfy an interim clawback obligation, management fees paid to the fund manager will typically be suspended. As of December 31, 2023, $58.3 million of performance allocations were subject to this clawback obligation, assuming that all applicable funds and investments were liquidated at their current unrealized fair values as of December 31, 2023.
The IFPR applies to TPG Europe, LLP, our London-based affiliate (“TPG Europe”), and relates to the firm’s regulatory capital requirements, remuneration rules as well as internal governance, disclosure, reporting and liquidity requirements. The withdrawal of the U.K. from the EU could have a range of adverse consequences for us, our funds or our funds’ portfolio companies.
The IFPR applies to TPG Europe, LLP, our London-based affiliate (“TPG Europe”), and relates to the firm’s regulatory capital requirements, remuneration rules as well as internal governance, disclosure, reporting and liquidity requirem ents. The withdrawal of the U.K. from the EU could have a range of adverse consequences for us, our funds or our funds’ portfolio companies.
Furthermore, if a request for return of borrowed securities occurs at a time when other short sellers of the security are receiving similar requests, a “short squeeze” can occur, in which case the public equity fund would be compelled to replace 50 Table of Contents borrowed securities previously sold short with purchases on the open market at the most disadvantageous time, possibly at prices significantly in excess of the proceeds received in originally selling the securities short. • The efficacy of investment and trading strategies depends largely on the ability to establish and maintain an overall market position in a combination of financial instruments.
Furthermore, if a request for return of borrowed securities occurs at a time when other short sellers of the security are receiving similar requests, a “short squeeze” can occur, in which case the public equity fund would be compelled to replace borrowed securities previously sold short with purchases on the open market at the most disadvantageous time, possibly at prices significantly in excess of the proceeds received in originally selling the securities short. • The efficacy of investment and trading strategies depends largely on the ability to establish and maintain an overall market position in a combination of financial instruments.
Upon an exchange of Common Units for Class A common stock, pursuant to the Exchange Agreement, an equal number of Class B common stock will be cancelled for no additional consideration.
Upon an exchange of Common Units for Class A common stock, pursuant to the A&R Exchange Agreement, an equal number of Class B common stock will be cancelled for no additional consideration.
The activities of our business, including the investment decisions we make and the activities of our employees in connection with our funds, portfolio companies or other investment vehicles like SPACs may subject us and them to the risk of litigation by third parties, including fund investors dissatisfied with the performance or management of our funds, holders of our or our funds’ portfolio companies’ debt or equity, investors in our SPACs and a variety of other potential litigants.
The activities of our business, including the investment decisions we make and the activities of our employees in connection with our funds, portfolio companies or other investment vehicles may subject us and them to the risk of litigation by third parties, including fund investors dissatisfied with the performance or management of our funds, holders of our or our funds’ portfolio companies’ debt or equity and a variety of other potential litigants.
Subject to funds being legally available, we intend to continue to cause the TPG Operating Group partnerships to make pro rata cash distributions to holders of Common Units, including us, that will enable us, when combined with the tax distributions we receive, to pay our taxes, make all payments required under the Tax Receivable Agreement and pay other expenses.
Subject to funds being legally available, we intend to continue to cause the TPG Operating Group partnership to make pro rata cash distributions to holders of Common Units, including us, that will enable us, when combined with the tax distributions we receive, to pay our taxes, make all payments required under the Tax Receivable Agreement and pay other expenses.
Our current private equity, real estate and certain other funds and investment vehicles have a finite life and a finite amount of commitments from fund investors.
Our current private equity, real estate and certain of our credit and other funds and investment vehicles have a finite life and a finite amount of commitments from fund investors.
Conflicts of interest may exist regarding decisions about the allocation of specific investment opportunities among us and our funds and the allocation of fees and costs among us, our funds and our funds’ portfolio companies.
Conflicts of interest exist regarding decisions about the allocation of specific investment opportunities among us and our funds and the allocation of fees and costs among us, our funds and our funds’ portfolio companies.
These restrictions could constrain the operation and profitability of firms in those industries, and therefore, negatively impact our funds’ investments in those sectors. 37 Table of Contents • Consumer Goods : China has recently enforced stringent regulations (including but not limited to the latest amendment to the Juvenile Protection Law, which came into effect on June 1, 2021) “to protect the physical and mental health of minors,” including significant limitations on the use of online gaming and private tutoring services for young adults and teenagers in China.
These restrictions could constrain the operation and profitability of firms in those industries, and therefore, negatively impact our funds’ investments in those sectors. • Consumer Goods : China has recently enforced stringent regulations (including but not limited to the latest amendment to the Juvenile Protection Law, which came into effect on June 1, 2021) “to protect the physical and mental health of minors,” including significant limitations on the use of online gaming and private tutoring services for young adults and teenagers in China.
In addition, the failure of certain “key persons” (i.e., professionals who are named as “key persons” for some or all of our funds) to devote the requisite time and attention required under a fund’s governing documents could cause the automatic suspension or termination of the fund’s commitment period, and in certain cases the general partner’s replacement and/or the fund’s dissolution.
In addition, the failure of certain “key persons” (i.e., professionals who are named as “key persons” for certain of our funds) to devote the requisite time and attention required under a fund’s governing documents could cause the automatic suspension or termination of the fund’s commitment period, and in certain cases the general partner’s replacement and/or the fund’s dissolution.
Provisions in our amended and restated certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management.
Provisions in our restated certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management.
Allegations that our funds’ portfolio companies engaged in conduct that is perceived to 78 Table of Contents have violated anti-corruption laws, economic sanctions laws, or export control laws could negatively impact us, create legal liability, or cause reputational and business harm that could negatively impact the valuation of a fund’s investments.
Allegations that our funds’ portfolio companies engaged in conduct that is perceived to 82 Table of Contents have violated anti-corruption laws, economic sanctions laws, or export control laws could negatively impact us, create legal liability, or cause reputational and business harm that could negatively impact the valuation of a fund’s investments.
This competitive pressure could negatively impact our ability to make successful investments and limit our ability to raise future funds, either of which could have a material adverse effect on our results of operations, financial condition and cash flow. 71 Table of Contents Climate change and climate change-related regulation could adversely affect our business.
This competitive pressure could negatively impact our ability to make successful investments and limit our ability to raise future funds, either of which could have a material adverse effect on our results of operations, financial condition and cash flow. 75 Table of Contents Climate change and climate change-related regulation could adversely affect our business.
A slowdown in the deployment of our available 73 Table of Contents capital could impact the management fees we earn on funds that generate fees based on invested (and not committed) capital, including our ability to raise, and the timing of raising, successor funds. Market volatility could also negatively impact our fundraising efforts in several ways.
A slowdown in the deployment of our available 77 Table of Contents capital could impact the management fees we earn on funds that generate fees based on invested (and not committed) capital, including our ability to raise, and the timing of raising, successor funds. Market volatility could also negatively impact our fundraising efforts in several ways.
See “—Ongoing trade negotiations and the potential for further regulatory reform in the U.S. and abroad may create regulatory uncertainty for us, our funds and our funds’ portfolio companies and our investment strategies and negatively impact the profitability of our funds and our funds’ portfolio companies.” For example, the tax authorities in certain countries, including certain EU member states, have sought to deny the benefits of income tax treaties or EU directives with respect to withholding taxes on interest and dividends and capital gains of non- 36 Table of Contents resident entities.
See “—Ongoing trade negotiations and the potential for further regulatory reform in the U.S. and abroad may create regulatory uncertainty for us, our funds and our funds’ portfolio companies and our investment strategies and negatively impact the profitability of our funds and our funds’ portfolio companies.” For example, the tax authorities in certain countries, including certain EU member states, have sought to deny the benefits of income tax treaties or EU directives with respect to withholding taxes on interest and dividends and capital gains of non-resident entities.
Many of our funds invest in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount we invest. Many of our funds invest in securities that are not publicly traded.
Many of our funds invest in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount we invest. Many of our funds invest in securities, including equity securities, that are not publicly traded.
We may incur significant costs to further upgrade our data processing systems and other operating technology in the future. Further, we provide certain back office services, such as information and technology, accounting and human resources services, to Sixth Street Partners, our former affiliate (the “former affiliate”), which could pose additional risks.
We may incur significant costs to further upgrade our data processing systems and other operating technology in the future. Further, we provide certain back office services, such as information and technology and accounting services, to Sixth Street Partners, our former affiliate (the “former affiliate”), which could pose additional risks.
We determine the compensation of our strategic partners on a case-by-case basis, which creates a conflict of interest in that we have an incentive to structure compensation under strategic business partnerships so that the fund (and hence its investors) bears the costs (directly or indirectly) instead of us.
We determine the compensation of our strategic partners and certain of our operators on a case-by-case basis, which creates a conflict of interest in that we have an incentive to structure compensation under strategic business partnerships so that the fund (and hence its investors) bears the costs (directly or indirectly) instead of us.
Some of these replacement rates may also be subject to compounding or similar adjustments that cause the amount of any payment referencing a replacement rate not to be determined until the end of the relevant calculation period, rather than at the beginning, which could lead to administrative challenges for the funds.
Some of the rates replacing may also be subject to compounding or similar adjustments that cause the amount of any payment referencing a replacement rate not to be determined until the end of the relevant calculation period, rather than at the beginning, which could lead to administrative challenges for the funds.
See “—Changes in the debt financing markets or higher interest rates could negatively impact the ability of certain of our funds and their investments to obtain attractive financing or re-financing and could increase the cost of such financing if it is obtained, which could lead to lower-yielding investments and could potentially decrease our net income.” 66 Table of Contents In addition, a portion of the indebtedness used to finance our funds’ investments often includes leveraged loans and debt instruments privately placed with institutional investors.
See “—Changes in the debt financing markets or higher interest rates could negatively impact the ability of certain of our funds and their investments to obtain attractive financing or re-financing and could increase the cost of such financing if it is obtained, which could lead to lower-yielding investments and could potentially decrease our net income.” In addition, a portion of the indebtedness used to finance our funds’ investments often includes leveraged loans and debt instruments privately placed with institutional investors.
In addition, a significant contraction or weakening in the market for debt financing or other adverse change relating to the terms of debt financing, including higher interest rates and equity requirements or more restrictive covenants, could have a material adverse impact on our business and that of our investment funds and their investments.
In addition, a significant contraction or weakening in the market for debt financing or other adverse change relating to the terms of debt financing, including higher equity requirements or more restrictive covenants, could have a material adverse impact on our business and that of our investment funds and their investments.
Investors in our funds may decide to move their capital away to other investments for 25 Table of Contents any number of reasons, such as changes in interest rates that make other investments more attractive; poor investment performance; changes in investor perception regarding our focus or alignment of interest, including if we change or broaden a fund’s investment strategy; reputational concerns; legislation reducing or minimizing the ability to invest in alternative assets; or departures or changes in responsibilities of key investment professionals.
Investors in our funds may decide to move their capital away to other investments for any number of reasons, such as changes in interest rates that make other investments more attractive; poor investment performance; changes in investor perception regarding our focus or alignment of interest, including if we change or broaden a fund’s investment strategy; reputational concerns; legislation reducing or minimizing the ability to invest in alternative assets; or departures or changes in responsibilities of key investment professionals.
We use indebtedness as a means to finance our business operations, which exposes us to the typical risks associated with using leverage, including those discussed under “—Dependence on significant leverage by certain of our funds and their investments could adversely affect the ability of our funds to achieve attractive rates of return on those investments.” We have outstanding notes due June 20, 2038 as well as revolving credit facilities with various maturity dates.
We use indebtedness as a means to finance our business operations, which exposes us to the typical risks associated with using leverage, including those discussed under “—Dependence on significant leverage by certain of our funds and their investments could adversely affect the ability of our funds to achieve attractive rates of return on those investments.” We have outstanding securitization notes due June 20, 2038, a term credit facility as well as revolving credit facilities with various maturity dates.
While none of our funds invests exclusively in China and our current investments in companies headquartered, listed or expected to be listed in Mainland China and Hong Kong represent approximately 3% of our AUM, our funds invest in various companies that operate globally, including in China, and thus could be subject to Chinese authorities’ policy changes.
While none of our funds invests exclusively in China and our current investments in companies headquartered, listed or expected to be listed in Mainland China and Hong Kong represent approximately 2% of our AUM, our funds invest in various companies that operate globally, including in China, and thus could be subject to Chinese authorities’ policy changes.
The accelerated payments required in such circumstances will be calculated by reference to the present value (at a discount rate equal to the lesser of (i) 6.5% per annum and (ii) one year LIBOR (as defined herein) (or its successor rate) plus 100 basis points) of all future payments that holders of Common Units or other recipients would have been entitled to receive under the Tax Receivable Agreement, and such accelerated payments and any other future payments under the Tax Receivable Agreement will utilize certain valuation assumptions, including that we will have sufficient taxable income to fully utilize the Covered Tax Items and that we are not subject to any alternative minimum tax.
The accelerated payments required in such circumstances will be calculated by reference to the present value (at a discount rate equal to the lesser of (i) 6.5% per annum and (ii) one-month SOFR (as defined herein) (or its successor rate) plus 100 basis points) of all future payments that holders of Common Units or other recipients would have been entitled to receive under the Tax Receivable Agreement, and such accelerated payments and any other future payments under the Tax Receivable Agreement will utilize certain valuation assumptions, including that we will have sufficient taxable income to fully utilize the Covered Tax Items and that we are not subject to any alternative minimum tax.
See “—The clawback provisions in our governing agreements may give rise to contingent obligations that may require us to return amounts to our funds and fund investors.” Our inability to raise new funds or capital for our funds could result in lower management fees and less capital to invest and place pressure on fees and fee arrangements of future funds, which could have a material adverse effect on our results of operations, financial condition and cash flow.
See “—The clawback provisions in our governing agreements may give rise to contingent obligations that may require us to return amounts to our funds and fund investors.” 25 Table of Contents Our inability to raise new funds or capital for our funds could result in lower management fees and less capital to invest and place pressure on fees and fee arrangements of future funds, which could have a material adverse effect on our results of operations, financial condition and cash flow.
However, under certain rules, each TPG Operating Group partnership (or other subsidiary partnership) may be liable in the event of an adjustment by the IRS to the tax return of such TPG Operating Group partnership (or subsidiary partnership), absent an election to the contrary (including an election to “push out” the partners in the year being audited).
However, under certain rules, the TPG Operating Group partnership (or other subsidiary partnership) may be liable in the event of an adjustment by the IRS to the tax return of the TPG Operating Group partnership (or subsidiary partnership), absent an election to the contrary (including an election to “push out” the partners in the year being audited).
See “—Third-party investors in our funds have the right under certain circumstances to remove the general partner of the fund, terminate commitment periods or dissolve the funds, each of which could lead to a substantial decrease in our revenues.” Moreover, many of our senior professionals’ equity interests in us are already substantially vested, thereby 23 Table of Contents limiting their incentive to remain with us.
See “—Third-party investors in our funds have the right under certain circumstances to remove the general partner of the fund, terminate commitment periods or dissolve the funds, each of which could lead to a substantial decrease in our revenues.” Moreover, many of our senior professionals’ equity interests in us are already substantially vested, thereby limiting their incentive to remain with us.
For example, we may seek to benefit fund 26 Table of Contents investors by limiting AUM to an amount we believe can be invested appropriately in accordance with our investment mandate and current or anticipated economic and market conditions or by voluntarily reducing management fee rates and terms for certain of our investors, funds or strategies, even when doing so may reduce our short-term revenue.
For example, we may seek to benefit fund investors by limiting AUM to an amount we believe can be invested appropriately in accordance with our investment mandate and current or anticipated economic and market conditions or by voluntarily reducing management fee rates and terms for certain of our investors, funds or strategies, even when doing so may reduce our short-term revenue.
Although the ultimate date of effectiveness and the final form and substance of the requirements for this proposed rule is not yet known and the ultimate scope and impact on our business is uncertain, compliance with this proposed rule, if finalized, may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.
Although the ultimate date of effectiveness and the final form and substance of the requirements for this proposed rule is not yet known and the ultimate scope and impact on our business is uncertain, compliance with this proposed rule, if finalized, will likely result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.
We may need to incur additional indebtedness to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise, and these 63 Table of Contents obligations could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
We may need to incur additional indebtedness to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise, and these obligations could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
The TPG Operating Group may be subject to material liabilities under these rules and related guidance if, for example, its calculations of taxable income are incorrect (including for years prior to the admission of us to the TPG Operating Group partnerships).
The TPG Operating Group may be subject to material liabilities under these rules and related guidance if, for example, its calculations of taxable income are incorrect (including for years prior to the admission of us to the TPG Operating Group partnership).
We, the TPG Operating Group partnerships and one of our wholly-owned subsidiaries have entered into the Tax Receivable Agreement with certain holders of Common Units that provides for the payment by us (or our subsidiary) to such holders (or their assignees under the Tax Receivable Agreement) of 85% of the benefits, if any, that we realize, or we are deemed to realize (calculated using certain assumptions), as a result of (i) adjustments to the tax basis of the assets of the TPG Operating Group as a result of certain exchanges of Common Units and (ii) certain other tax benefits, including tax benefits attributable to payments under the Tax Receivable Agreement (the “Covered Tax Items”).
We, the TPG Operating Group partnership and one of our wholly-owned subsidiaries have entered into the Tax Receivable Agreement with certain holders of Common Units (“TRA holders”) that provides for the payment by us (or our subsidiary) to such holders (or their assignees under the Tax Receivable Agreement) of 85% of the benefits, if any, that we realize, or we are deemed to realize (calculated using certain assumptions), as a result of (i) adjustments to the tax basis of the assets of the TPG Operating Group as a result of certain exchanges of Common Units and (ii) certain other tax benefits, including tax benefits attributable to payments under the Tax Receivable Agreement (the “Covered Tax Items”).
Depending on market conditions, we may be unable to refinance or renew all or part of our secured borrowings or our credit facility, or find alternate sources of financing (including issuing equity), on commercially reasonable terms or at all.
Depending on market conditions, we may be unable to refinance or renew all or part of our secured borrowings or our credit facilities, or find alternate sources of financing (including issuing equity), on commercially reasonable terms or at all.
See Note 18 , “Commitments and Contingencies—Legal Actions and Other Proceedings.” We generally expect the SEC’s oversight of global investment firms to continue to focus on concerns related to transparency, investor disclosure practices, fees and expenses, valuation, compliance policies and procedures and conflicts of interest, which could impact us in various ways.
See Note 1 7, “Commitments and Contingencies—Legal Actions and Other Proceedings.” We generally expect the SEC’s oversight of global investment firms to continue to focus on concerns related to transparency, investor disclosure practices, fees and expenses, valuation, compliance policies and procedures and conflicts of interest, which could impact us in various ways.
Further, as institutional investors increasingly consolidate their relationships with investment firms and competition becomes more acute, we may receive more requests to modify the terms of our new funds, including reductions in management fees. For example, certain of our newer funds include more favorable terms for fund investors that commit to early closes.
Further, as 27 Table of Contents institutional investors increasingly consolidate their relationships with investment firms and competition becomes more acute, we may receive more requests to modify the terms of our new funds, including reductions in management fees. For example, certain of our newer funds include more favorable terms for fund investors that commit to early closes.
Our real estate funds may also make investments in residential 49 Table of Contents real estate projects and/or otherwise participate in financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more highly susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to the ownership and operation of commercial real estate assets.
Our real estate funds may also make investments in residential real estate projects and/or otherwise participate in financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more highly susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to the ownership and operation of commercial real estate assets.
Regarding the impact of our status as a corporation on our income taxes, see Note 13 , “Income Taxes,” to the Consolidated Financial Statements. 82 Table of Contents Tax laws, regulations or treaties newly enacted or enacted in the future may cause us to revalue our net deferred tax assets and have a material change to our effective tax rate and tax liabilities.
Regarding the impact of our status as a corporation on our income taxes, see Note 13 , “Income Taxes,” to the Consolidated Financial Statements. Tax laws, regulations or treaties newly enacted or enacted in the future may cause us to revalue our net deferred tax assets and have a material change to our effective tax rate and tax liabilities.
Increased regulations generally increase our costs, and we could continue to experience higher costs if new laws require us to spend more time, hire additional personnel or buy new technology to comply effectively.
Increased regulations generally increase our costs, and we could continue to experience higher costs if new laws and regulatory requirements require us to spend more time, hire additional personnel or buy new technology to comply effectively.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties Our principal executive offices are located in leased office space at 301 Commerce Street, Fort Worth, Texas 76102. We also lease office space in Beijing, Dubai, Hong Kong, London, Luxembourg, Melbourne, Mumbai, New York, San Francisco, Seoul, Shanghai, Singapore and Washington, D.C. We do not own any real property.
Biggest changeItem 2. Properties Our principal executive offices are located in leased office space at 301 Commerce Street, Fort Worth, Texas 76102. We also lease office space in Amsterdam, Beijing, Chicago, Dubai, Frankfurt, Guangdong, Hong Kong, London, Los Angeles, Luxembourg, Melbourne, Miami, Milan, Mumbai, New York, San Francisco, Seoul, Shanghai, Singapore, Tokyo and Washington, D.C.
We consider these facilities to be suitable and adequate for the management and operation of our business. 84 Table of Contents
We do not own any real property. We consider these facilities to be suitable and adequate for the management and operation of our business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeHowever, given the inherent unpredictability of these types of proceedings, an adverse outcome in certain matters could have a material effect on TPG’s financial results in any particular period. See Note 1 8 , “Commitments and Contingencies,” to the Consolidated Financial Statements included in this Report.
Biggest changeHowever, given the inherent unpredictability of these types of proceedings, an adverse outcome in certain matters could have a material effect on TPG’s financial results in any particular period. See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included in this Report. Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+5 added−16 removed4 unchanged
Biggest changeThe shares of Class A common stock were issued in reliance on the exemption contained in Section 4(a)(2) of the Securities Act on the basis that the transaction did not involve a public offering. No underwriters were involved in the transaction.
Biggest changeThe Common Units and shares of Class B common stock issued in connection with the Acquisition were not and will not be registered under the Securities Act, and were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
In addition, the TPG Operating Group Limited Partnership Agreements generally require that pro rata cash distributions be made to holders of Common Units, including us, at certain assumed tax rates, which we refer to as “tax distributions.” Further, subject to funds being legally available, we intend to cause the TPG Operating Group partnerships to make pro rata cash distributions to holders of Common Units, including us, that will enable us, when combined with the tax distributions we receive, to pay our taxes, make all payments required under the Tax Receivable Agreement and pay other expenses.
In addition, the TPG Operating Group Limited Partnership agreements generally require that pro rata cash distributions be made to holders of Common Units, including us, at certain assumed tax rates, which we refer to as “tax distributions.” Further, subject to funds being legally available, we intend to cause the TPG Operating Group to make pro rata cash distributions to holders of Common Units, including us, that will enable us, when combined with the tax distributions we receive, to pay our taxes, make all payments required under the Tax Receivable Agreement and pay other expenses.
Dividend Policy Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of DE attributable to the TPG Operating Group, subject to adjustment as determined by the Executive Committee of our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations.
Dividend Policy Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of DE attributable to the TPG Operating Group, subject to adjustment as determined by our board of directors and, until the Sunset, the Executive Committee of our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash 90 Table of Contents requirements such as tax-related payments and clawback obligations.
For more information on DE, see “Item7.—Management’s Discussion and Analysis of Financial Results of Operation—Non-GAAP Financial Metrics—Distributable Earnings.” Prior to the Sunset, any future determination as to the declaration and payment of dividends, if any, will be at the discretion of the Executive Committee and will depend on a number of factors, including: • general economic and business conditions; • our strategic plans and prospects; • our business and investment opportunities; • our financial condition and operating results; • our available cash and current and anticipated cash needs; • our capital requirements; • contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries (including payment obligations pursuant to the Tax Receivable Agreement) to us; and 85 Table of Contents • such other factors as the Executive Committee may deem relevant.
For more information on DE, see “Item 7.—Management’s Discussion and Analysis of Financial Results of Operation—Non-GAAP Financial Metrics—Distributable Earnings.” Prior to the Sunset, any future determination as to the declaration and payment of dividends, if any, will be at the discretion of the board of directors and Executive Committee and will depend on a number of factors, including: • general economic and business conditions; • our strategic plans and prospects; • our business and investment opportunities; • our financial condition and operating results; • our available cash and current and anticipated cash needs; • our capital requirements; • contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries (including payment obligations pursuant to the Tax Receivable Agreement) to us; and • such other factors as the board of directors and Executive Committee may deem relevant.
All of the foregoing is subject to the further qualification that the declaration and payment of any dividends are at the sole discretion of the Executive Committee prior to the Sunset and the Executive Committee may change our dividend policy at any time, including, without limitation, to reduce such dividends or even to eliminate such dividends entirely.
All of the foregoing is subject to the further qualification that the declaration and payment of any dividends are at the sole discretion of the board of directors and, until the Sunset, the Executive Committee and the board of directors and Executive Committee may change our dividend policy at any time, including, without limitation, to reduce such dividends or even to eliminate such dividends entirely.
We are a holding company, and our only material assets are Common Units representing 25.6% of the Common Units and 100% of the interests in certain intermediate holding companies.
We are a holding company, and our only material assets are Common Units representing 22% of the Common Units and 100% of the interests in certain intermediate holding companies.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of our Class A common stock are listed on the Nasdaq Global Select Market under the symbol “TPG.” The number of holders of record of our Class A common stock as of February 21, 2023 was 78.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of our Class A common stock are listed on the Nasdaq Global Select Market under the symbol “TPG.” The number of holders of record of our common stock was 77 as of February 20, 2024.
Removed
Holders of Promote Units will not be entitled to cash distributions from the TPG Operating Group, except certain distributions of performance allocations received by the TPG Operating Group.
Added
Holders of Promote Units will not be entitled to cash distributions from the TPG Operating Group, except certain distributions of performance allocations received by the TPG Operating Group. 91 Table of Contents Recent Sales of Unregistered Securities In connection with the closing of the Angelo Gordon acquisition, on November 1, 2023 (“Closing”), the Angelo Gordon Parties received (i) 53.0 million Common Units, subject to certain adjustments, (ii) 8.4 million RSUs that, subject to the terms and conditions of the RSUs, will settle in shares of our Class A common stock, subject to certain adjustments and (iii) rights to an earnout payment of up to $400 million in value (the “Earnout Payment”), subject to the satisfaction of certain fee-related revenue targets during the period beginning on January 1, 2026 and ending on December 31, 2026.
Removed
Use of Proceeds On January 18, 2022, we closed our IPO of our Class A common stock in which we and the selling stockholder sold 33,900,000 shares of Class A common stock, consisting of 28,310,194 shares from us and 5,589,806 from the selling stockholder.
Added
The Earnout Payment is payable, at TPG Operating Group II, L.P.’s election, subject to certain limitations set forth in the Transaction Agreement, in cash, Common Units (and an equal number of shares of Class B common stock) (the “Earnout Equity Payment”).
Removed
Subsequent to the IPO, the underwriters exercised their option to purchase an additional 3,390,000 shares of Class A common stock, consisting of 1,775,410 shares from us and 1,614,590 shares from the selling stockholder, and the sale of such additional shares closed on February 9, 2022.
Added
On November 13, 2023, upon effectiveness of our Certificate of Amendment of the Amended and Restated Certificate of Incorporation, we issued to the Angelo Gordon Parties 53.0 million shares of Class B common stock.
Removed
The shares sold in the IPO and shares sold pursuant to the underwriters’ option to purchase additional shares were registered under the Securities Act pursuant to our Registration Statement on Form S-1 (File No. 333-261681) which was declared effective by the SEC on January 12, 2022.
Added
The Common Units and shares of Class B common stock are subject to the terms of our A&R Investor Rights Agreement, which sets forth certain transfer restrictions and customary registration rights with respect to the shares of Class A common stock, shares of Class B common stock and Common Units (including any Common Units received as part of the Earnout Equity Payment).
Removed
The shares of Class A common stock were sold at an offering price to the public of $29.50 per share.
Added
In particular, applicable Angelo Gordon Parties may not transfer or exchange (i) any shares of Class A common stock, shares of Class B common stock or Common Units prior to the first anniversary of Closing; (ii) from the first anniversary until the second anniversary of Closing, more than one third (1/3) of the number of shares of Class A common stock, shares of Class B common stock or Common Units owned, directly or indirectly, by the applicable Angelo Gordon Parties as of Closing; and (iii) between the second and third anniversary of Closing, more than two thirds (2/3) of the number of shares of Class A common stock, shares of Class B common stock or Common Units owned, directly or indirectly, by the applicable Angelo Gordon Parties as of Closing.
Removed
We received proceeds from the IPO of approximately $770.9 million, net of $41.8 million in underwriting discounts and commissions, as well as $22.5 million of issuance costs, and the selling stockholder received net proceeds from the IPO of approximately $156.7 million, net of $8.2 million in underwriting discounts and commissions.
Removed
The sale of additional shares to the underwriters pursuant to the underwriters’ option to purchase additional shares resulted in net proceeds to us of approximately $49.8 million, net of $2.6 million in underwriting discounts and commissions, and to the selling stockholder of approximately $45.2 million, net of $2.4 million in underwriting discounts and commissions.
Removed
We did not receive any proceeds from the sale of shares of our Class A common stock by the selling stockholder. We did, however, bear the costs associated with the sale of shares by the selling stockholder, other than underwriting discounts and commissions. We incurred offering expenses of $34.2 million.
Removed
Our use of proceeds was consistent with the final prospectus filed on January 14, 2022: • We used approximately $379.6 million of the net proceeds from the IPO to purchase Common Units from certain existing owners of the TPG Operating Group (none of whom is an active TPG partner or Founder) at an aggregate per-unit price equal to the per-share price paid by the underwriters for shares of our Class A common stock in the IPO.
Removed
Accordingly, we did not retain any of these proceeds. • We used approximately $413.3 million of the net proceeds from the IPO to acquire 14,745,763 Common Units of the TPG Operating Group to obtain our economic interest in the TPG Operating Group at an aggregate per-unit price equal to the per-share price paid by the underwriters for shares of our Class A common stock in the IPO and such amount was contributed to the TPG Operating Group partnerships based on their relative fair market values as determined by the general partner of the TPG Operating Group partnerships. • The TPG Operating Group intends to use these proceeds, after paying the expenses incurred by us in connection with the IPO and the Reorganization, for general corporate purposes, which may include facilitating the growth of our existing business and/or expanding into complementary new lines of business or geographic markets. 86 Table of Contents J.P.
Removed
Morgan Securities LLC, Goldman Sachs & Co. LLC and Morgan Stanley acted as joint book-running managers of the IPO and as representatives of the underwriters.
Removed
No offering expenses were paid directly or indirectly to any of our directors or officers, or their associates, or persons owning 10% or more of any class of our equity securities or to any other affiliates, other than to TPG Capital BD, our indirect subsidiary that served as an underwriter in the IPO and which received customary underwriting discount and commissions.
Removed
Recent Sales of Unregistered Securities In connection with the Reorganization, TPG Inc. issued 40,726,060 shares of Class A common stock and 8,258,901 shares of nonvoting Class A common stock to certain unitholders of the TPG Operating Group in exchange for Common Units, including to the selling stockholder in the IPO.
Removed
Also in connection with the Reorganization, TPG Inc. issued 229,652,641 shares of Class B common stock to certain unitholders of the TPG Operating Group, including entities beneficially owned by certain members of its management and board of directors.
Removed
The shares of Class B common stock were issued for nominal consideration in reliance on the exemption contained in Section 4(a)(2) of the Securities Act on the basis that the transaction did not involve a public offering. No underwriters were involved in the transaction. Issuer Purchases of Equity Securities Not Applicable. Item 6.
Removed
Selected Financial Data (Removed and Reserved) 87 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

217 edited+223 added−245 removed120 unchanged
Biggest changeSee “Item 1A.Risk Factors—Risks Related to Our Business—Our funds’ historical returns should not be considered as indicative of our or our funds’ future results or of any returns expected on an investment in our Class A common stock.” The following tables reflect the performance of our funds as of December 31, 2022: Fund Vintage Year (1) Capital Committed (2) Capital Invested (3) Realized Value (4) Unrealized Value (5) Total Value (6) Gross IRR (7) Gross MoM (7) Net IRR (8) Investor Net MoM (9) ($ in millions) Platform: Capital Capital Funds Air Partners 1993 $ 64 $ 64 $ 697 $ — $ 697 81 % 10.9x 73 % 8.9x TPG I 1994 721 696 3,095 — 3,095 47 % 4.4x 36 % 3.5x TPG II 1997 2,500 2,554 5,010 — 5,010 13 % 2.0x 10 % 1.7x TPG III 1999 4,497 3,718 12,360 — 12,360 34 % 3.3x 26 % 2.6x TPG IV 2003 5,800 6,157 13,733 1 13,734 20 % 2.2x 15 % 1.9x TPG V 2006 15,372 15,564 22,071 1 22,072 6 % 1.4x 5 % 1.4x TPG VI 2008 18,873 19,220 32,670 993 33,663 14 % 1.7x 10 % 1.5x TPG VII 2015 10,495 10,055 19,302 4,351 23,653 27 % 2.3x 21 % 1.9x TPG VIII 2019 11,505 10,686 2,735 14,053 16,788 54 % 1.7x 35 % 1.4x TPG IX 2022 8,876 513 — 595 595 NM NM NM NM Capital Funds 78,703 69,227 111,673 19,994 131,667 23 % 1.9x 15 % 1.7x Asia Funds Asia I 1994 96 78 71 — 71 (3) % 0.9x (10) % 0.7x Asia II 1998 392 764 1,669 — 1,669 17 % 2.2x 14 % 1.9x Asia III 2000 724 623 3,316 — 3,316 46 % 5.3x 31 % 3.8x Asia IV 2005 1,561 1,603 4,089 — 4,089 23 % 2.6x 17 % 2.1x Asia V 2007 3,841 3,257 5,219 366 5,585 10 % 1.7x 6 % 1.4x Asia VI 2012 3,270 3,242 2,654 4,419 7,073 17 % 2.2x 13 % 1.8x Asia VII 2017 4,630 4,303 1,883 5,833 7,716 28 % 1.8x 18 % 1.5x Asia VIII 2022 3,428 321 — 321 321 NM NM NM NM Asia Funds 17,942 14,191 18,901 10,939 29,840 21 % 2.1x 15 % 1.7x Healthcare Funds THP I 2019 2,704 2,432 814 2,662 3,476 45 % 1.5x 25 % 1.3x THP II 2022 1,956 225 — 261 261 NM NM NM NM Healthcare Funds 4,660 2,657 814 2,923 3,737 45 % 1.5x 25 % 1.3x Continuation Vehicles TPG AAF 2021 1,317 1,314 75 2,425 2,500 61 % 1.9x 51 % 1.7x TPG AION 2021 207 207 — 207 207 — % 1.0x (1) % 1.0x Continuation Vehicles 1,524 1,521 75 2,632 2,707 53 % 1.8x 44 % 1.6x Platform: Capital (excl-Legacy (15) ) 102,829 87,596 131,463 36,488 167,951 23 % 2.0x 15 % 1.7x Legacy Funds TES I 2016 303 206 215 165 380 28 % 1.8x 19 % 1.5x Platform: Capital 103,132 87,802 131,678 36,653 168,331 23 % 2.0x 15 % 1.7x 141 Table of Contents Fund Vintage Year (1) Capital Committed (2) Capital Invested (3) Realized Value (4) Unrealized Value (5) Total Value (6) Gross IRR (7) Gross MoM (7) Net IRR (8) Investor Net MoM (9) ($ in millions) Platform: Growth Growth Funds STAR 2007 1,264 1,259 1,862 69 1,931 13 % 1.5x 6 % 1.3x Growth II 2011 2,041 2,184 4,712 610 5,322 22 % 2.5x 16 % 2.0x Growth III 2015 3,128 3,315 4,534 2,387 6,921 28 % 2.1x 19 % 1.7x Growth IV 2017 3,739 3,568 1,834 4,556 6,390 25 % 1.8x 17 % 1.5x Gator 2019 726 686 645 604 1,249 38 % 1.8x 28 % 1.6x Growth V 2020 3,558 2,409 316 3,123 3,439 40 % 1.5x 25 % 1.3x Growth Funds 14,456 13,421 13,903 11,349 25,252 21 % 1.9x 15 % 1.6x TDM 2017 1,326 443 — 1,029 1,029 28 % 2.3x 23 % 2.0x Tech Adjacencies Funds TTAD I 2018 1,574 1,497 789 1,924 2,713 36 % 1.8x 29 % 1.6x TTAD II 2021 2,963 1,567 — 1,569 1,569 (7) % 1.0x (16) % 0.9x Tech Adjacencies Funds 4,537 3,064 789 3,493 4,282 33 % 1.5x 25 % 1.3x Platform: Growth (excl-Legacy (15) ) 20,319 16,928 14,692 15,871 30,563 21 % 1.9x 15 % 1.6x Legacy Funds Biotech III 2008 510 468 979 355 1,334 17 % 2.9x 12 % 2.2x Biotech IV 2012 106 99 121 3 124 7 % 1.3x 2 % 1.1x Biotech V 2016 88 81 27 54 81 — % 1.0x (4) % 0.9x ART 2013 258 242 27 239 266 2 % 1.1x (2) % 0.9x Platform: Growth 21,281 17,818 15,846 16,522 32,368 20 % 1.9x 14 % 1.6x Platform: Impact The Rise Funds Rise I 2017 2,106 1,885 1,271 2,438 3,709 25 % 2.0x 17 % 1.6x Rise II 2020 2,176 1,836 89 2,365 2,454 36 % 1.4x 20 % 1.2x Rise III 2022 2,034 358 — 358 358 NM NM NM NM The Rise Funds 6,316 4,079 1,360 5,161 6,521 26 % 1.7x 17 % 1.4x TSI 2018 333 133 368 — 368 35 % 2.8x 25 % 2.1x Evercare 2019 621 416 16 523 539 8 % 1.3x 3 % 1.1x Rise Climate 2021 7,268 2,218 34 2,335 2,369 29 % 1.1x (21) % 0.9x TPG NEXT (19) 2022 510 — — — — NM NM NM NM Platform: Impact 15,048 6,846 1,778 8,019 9,797 25 % 1.5x 15 % 1.3x Platform: Real Estate TPG Real Estate Partners DASA RE 2012 1,078 576 1,068 5 1,073 21 % 1.9x 15 % 1.6x TREP II 2014 2,065 2,211 3,189 412 3,601 29 % 1.7x 19 % 1.5x TREP III 2018 3,722 3,946 1,753 3,339 5,092 22 % 1.4x 16 % 1.3x TREP IV 2022 6,820 555 9 546 555 NM NM NM NM TPG Real Estate Partners 13,685 7,288 6,019 4,302 10,321 24 % 1.6x 17 % 1.4x TRTX 2014 1,916 14 NM NM NM NM NM NM NM NM TAC+ 2021 1,797 915 86 875 961 5 % 1.1x 1 % 1.0x Platform: Real Estate 17,398 8,203 6,105 5,177 11,282 24 % 1.5x 16 % 1.3x 142 Table of Contents Fund Vintage Year (1) Capital Committed (2) Capital Invested (3) Realized Value (4) Unrealized Value (5) Total Value (6) Gross IRR (7) Gross MoM (7) Net IRR (8) Investor Net MoM (9) ($ in millions) Platform: Market Solutions TPEP Long/Short NM NM NM NM 2,249 NM NM (13) NM NM (13) NM TPEP Long Only NM NM NM NM 1,653 NM NM (13) NM NM (13) NM TSCF 2021 1,108 186 13 162 175 (6) % 0.9x (8) % 0.9x TGS (18) 2022 455 88 — 88 88 NM NM NM NM TPG TIGER (18) 2022 300 8 — 7 7 NM NM NM NM TPG TIGER 2 (19) 2022 130 — — — — NM NM NM NM NewQuest I (18) 2011 390 291 767 — 767 48 % 3.2x 37 % 2.3x NewQuest II (18) 2013 310 337 571 172 743 25 % 2.3x 20 % 1.8x NewQuest III (18) 2016 541 523 358 502 860 16 % 1.7x 10 % 1.4x NewQuest IV (18) 2020 1,000 784 103 1,007 1,110 45 % 1.5x 25 % 1.3x NewQuest V (18) (19) 2022 378 — — — — NM NM NM NM Platform: Market Solutions (12) 4,612 2,217 1,812 5,840 3,750 37 % 1.8x 25 % 1.5x Discontinued Funds (16) 5,870 4,103 5,303 — 5,303 7 % 1.3x 3 % 1.1x Total (excl-Legacy (15) and Discontinued Funds (16 )) 160,206 121,790 155,850 71,395 223,343 23 % 1.9x 15 % 1.6x Total $ 167,341 $ 126,989 $ 162,522 $ 72,211 $ 230,831 22 % 1.9x 14 % 1.6x __________ Note: Past performance is not indicative of future results.
Biggest changeSee “Item 1A.Risk Factors—Risks Related to Our Business—Our funds’ historical returns should not be considered as indicative of our or our funds’ future results or of any returns expected on an investment in our Class A common stock.” 144 Table of Contents The following tables reflect the performance of our selected funds as of December 31, 2023 ($ in millions): Fund Vintage Year (1) Capital Committed (2) Capital Invested (3) Realized Value (4) Unrealized Value (5) Total Value (6) Gross IRR (7) Gross MoM (7) Net IRR (8) Net MoM (9) Platform: Capital Capital Funds Air Partners 1993 $ 64 $ 64 $ 697 $ — $ 697 81 % 10.9x 73 % 8.9x TPG I 1994 721 696 3,095 — 3,095 47 % 4.4x 36 % 3.5x TPG II 1997 2,500 2,554 5,010 — 5,010 13 % 2.0x 10 % 1.7x TPG III 1999 4,497 3,718 12,360 — 12,360 34 % 3.3x 26 % 2.6x TPG IV 2003 5,800 6,157 13,733 — 13,733 20 % 2.2x 15 % 1.9x TPG V 2006 15,372 15,564 22,071 1 22,072 6 % 1.4x 5 % 1.4x TPG VI 2008 18,873 19,220 33,344 196 33,540 14 % 1.7x 10 % 1.5x TPG VII 2015 10,495 10,205 19,422 4,506 23,928 26 % 2.3x 20 % 1.9x TPG VIII 2019 11,505 10,737 3,264 15,438 18,702 37 % 1.7x 25 % 1.5x TPG IX 2022 12,014 4,662 — 5,225 5,225 225 % 1.2x 39 % 1.0x Capital Funds 81,841 73,577 112,996 25,366 138,362 23 % 1.9x 15 % 1.6x Asia Funds Asia I 1994 96 78 71 — 71 (3 %) 0.9x (10 %) 0.7x Asia II 1998 392 764 1,669 — 1,669 17 % 2.2x 14 % 1.9x Asia III 2000 724 623 3,316 — 3,316 46 % 5.3x 31 % 3.8x Asia IV 2005 1,561 1,603 4,089 — 4,089 23 % 2.6x 17 % 2.1x Asia V 2007 3,841 3,257 5,405 166 5,571 10 % 1.7x 6 % 1.4x Asia VI 2012 3,270 3,285 3,380 3,505 6,885 15 % 2.1x 11 % 1.7x Asia VII 2017 4,630 4,522 2,341 5,652 7,993 21 % 1.7x 14 % 1.4x Asia VIII 2022 4,319 2,022 — 2,375 2,375 686 % 1.2x 129 % 1.1x Asia Funds 18,833 16,154 20,271 11,698 31,969 20 % 2.0x 14 % 1.7x Healthcare Funds THP I 2019 2,704 2,405 840 2,978 3,818 33 % 1.6x 19 % 1.3x THP II 2022 3,576 1,093 — 1,294 1,294 339 % 1.3x 85 % 1.1x Healthcare Funds 6,280 3,498 840 4,272 5,112 35 % 1.5x 20 % 1.3x Continuation Vehicles TPG AAF 2021 1,317 1,314 2,720 — 2,720 43 % 2.1x 37 % 1.9x TPG AION 2021 207 207 — 182 182 (5 %) 0.9x (6 %) 0.9x Continuation Vehicles 1,524 1,521 2,720 182 2,902 37 % 1.9x 31 % 1.7x Platform: Growth Growth Funds STAR 2007 1,264 1,259 1,865 42 1,907 13 % 1.5x 6 % 1.3x Growth II 2011 2,041 2,185 4,734 598 5,332 22 % 2.5x 16 % 2.0x Growth III 2015 3,128 3,370 4,675 2,306 6,981 26 % 2.0x 18 % 1.7x Growth IV 2017 3,739 3,612 1,946 4,890 6,836 22 % 1.8x 15 % 1.5x Gator 2019 726 686 661 608 1,269 31 % 1.8x 25 % 1.6x Growth V 2020 3,558 3,225 403 4,375 4,778 29 % 1.5x 18 % 1.3x Growth VI 2023 1,112 144 — 144 144 NM NM NM NM Growth Funds 15,568 14,481 14,284 12,963 27,247 20 % 1.9x 14 % 1.6x Tech Adjacencies Funds TTAD I 2018 1,574 1,497 941 1,709 2,650 25 % 1.7x 20 % 1.5x TTAD II 2021 3,198 1,763 63 1,896 1,959 9 % 1.1x 4 % 1.0x Tech Adjacencies Funds 4,772 3,260 1,004 3,605 4,609 22 % 1.4x 16 % 1.3x TDM 2017 1,326 571 — 1,142 1,142 20 % 2.0x 16 % 1.7x LSI 2023 367 84 — 84 84 NM NM NM NM 145 Table of Contents Fund Vintage Year (1) Capital Committed (2) Capital Invested (3) Realized Value (4) Unrealized Value (5) Total Value (6) Gross IRR (7) Gross MoM (7) Net IRR (8) Net MoM (9) Platform: Impact The Rise Funds Rise I 2017 $ 2,106 $ 1,996 $ 1,318 $ 2,511 $ 3,829 21 % 1.9x 13 % 1.5x Rise II 2020 2,176 1,973 128 2,817 2,945 25 % 1.5x 16 % 1.3x Rise III 2022 2,700 1,103 5 1,261 1,266 98 % 1.2x (2 %) 1.0x The Rise Funds 6,982 5,072 1,451 6,589 8,040 22 % 1.6x 14 % 1.3x TSI 2018 333 133 368 — 368 35 % 2.8x 25 % 2.1x Evercare 2019 621 432 29 326 355 (5 %) 0.8x (10 %) 0.7x Rise Climate 2021 7,268 4,579 208 5,839 6,047 54 % 1.4x 27 % 1.2x TPG NEXT 2023 510 3 — 3 3 NM NM NM NM Platform: Real Estate TPG Real Estate Partners DASA RE 2012 1,078 576 1,069 — 1,069 21 % 1.9x 15 % 1.6x TREP II 2014 2,065 2,213 3,520 60 3,580 28 % 1.7x 18 % 1.5x TREP III 2018 3,722 4,151 2,630 2,606 5,236 14 % 1.3x 9 % 1.2x TREP IV 2022 6,820 1,708 208 1,481 1,689 (14 %) 0.9x (63 %) 0.5x TPG Real Estate Partners 13,685 8,648 7,427 4,147 11,574 21 % 1.5x 13 % 1.3x TAC+ 2021 1,797 916 98 815 913 (1 %) 1.0x (4 %) 0.9x TRECO 378 — — — — NM NM NM NM Platform: Market Solutions NewQuest Funds NewQuest I (11) 2011 390 291 767 — 767 48 % 3.2x 37 % 2.3x NewQuest II (11) 2013 310 342 646 115 761 25 % 2.3x 19 % 1.8x NewQuest III (11) 2016 541 543 412 450 862 13 % 1.6x 8 % 1.3x NewQuest IV (11) 2020 1,000 879 132 1,108 1,240 23 % 1.4x 13 % 1.2x NewQuest V (11) 2022 502 272 7 344 351 NM NM NM NM NewQuest Funds 2,743 2,327 1,964 2,017 3,981 35 % 1.8x 23 % 1.5x TGS (11) 2022 749 272 — 295 295 NM NM NM NM Platform: TPG Angelo Gordon Credit Solutions Credit Solutions Credit Solutions I 2019 1,805 1,801 1,475 1,156 2,631 17 % 1.5x 13 % 1.4x Credit Solutions I Dislocation A 2020 909 602 795 — 795 34 % 1.3x 27 % 1.3x Credit Solutions I Dislocation B 2020 308 176 211 — 211 28 % 1.2x 21 % 1.2x Credit Solutions II 2021 3,134 2,559 245 2,655 2,900 16 % 1.1x 11 % 1.1x Credit Solutions II Dislocation A 2022 1,310 868 5 1,001 1,006 34 % 1.2x 25 % 1.1x Credit Solutions 7,466 6,006 2,731 4,812 7,543 19 % 1.3x 14 % 1.2x Essential Housing Essential Housing I 2020 642 456 470 102 572 15 % 1.3x 12 % 1.2x Essential Housing II 2021 2,534 1,071 59 1,112 1,171 14 % 1.1x 10 % 1.1x Essential Housing 3,176 1,527 529 1,214 1,743 14 % 1.2x 11 % 1.1x Structured Credit & Specialty Finance ABC Fund 2021 1,005 653 29 709 738 17 % 1.1x 13 % 1.1x Structured Credit & Specialty Finance 1,005 653 29 709 738 17 % 1.1x 13 % 1.1x 146 Table of Contents Fund Vintage Year (1) Capital Committed (2) Capital Invested (3) Realized Value (4) Unrealized Value (5) Total Value (6) Gross IRR (7) Gross MoM (7) Net IRR (8) Net MoM (9) Middle Market Direct Lending (12) MMDL I 2015 $ 594 $ 572 $ 846 $ — $ 846 14 % 1.6x 10 % 1.4x MMDL II 2016 1,580 1,563 1,684 608 2,292 14 % 1.6x 11 % 1.5x MMDL III 2018 2,751 2,548 1,929 1,648 3,577 14 % 1.5x 10 % 1.4x MMDL IV 2020 2,671 2,522 457 2,713 3,170 16 % 1.3x 12 % 1.3x MMDL IV Annex 2021 797 672 69 700 769 15 % 1.2x 11 % 1.2x MMDL V 2022 1,972 603 6 668 674 18 % 1.2x 14 % 1.2x Middle Market Direct Lending 10,365 8,480 4,991 6,337 11,328 15 % 1.5x 11 % 1.4x U.S.
We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022.
We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022.
The warrants held by public investors and forward purchase agreements are treated as liability instruments rather than equity instruments and subject to mark-to-market adjustments each period. Upon the consummation of acquisitions of target companies by our Public SPACs or the wind down of a Public SPAC, the associated liability will no longer be included in our consolidated financial statements.
The warrants held by public investors and forward purchase agreements are treated as liability instruments rather than equity instruments and subject to mark-to-market adjustments each period. Upon the consummation of acquisitions of target companies by our Public SPACs or the wind down of a Public SPAC, the associated liability will no longer be included in our Consolidated Financial Statements.
GAAP net income and should be considered in addition to and not in lieu of the results of operations presented accordance with U.S. GAAP discussed further under “—Key Components of our Results of Operations—Results of Operations” prepared in accordance with U.S. GAAP. After-Tax Distributable Earnings .
GAAP net income and should be considered in addition to and not in lieu of the results of operations presented in accordance with U.S. GAAP discussed further under “—Key Components of our Results of Operations—Results of Operations” prepared in accordance with U.S. GAAP. After-Tax Distributable Earnings .
During the year ended December 31, 2022, cash used in financing activities primarily reflects the net impact of distributions to partners and non-controlling interests, the repayment of amounts borrowed under the Subordinated Credit Facility, and purchase of partnership interests with IPO proceeds, which is partially offset by the net proceeds from the IPO in January 2022.
Cash used in financing activities during year ended December 31, 2022 primarily reflects the net impact of distributions to partners and non-controlling interests, the repayment of amounts borrowed under the Subordinated Credit Facility, and purchase of partnership interests with IPO proceeds, which is partially offset by the net proceeds from the IPO in January 2022.
Year Ended December 31, 2022 2021 Change % ($ in thousands) TPG Operating Group Shared: TPG VII $ 171,926 $ 902,941 $ (731,015) (81) % TPG VIII 445,242 558,759 (113,517) (20) % TPG IX 1,146 — 1,146 NM Asia VI (1) (50,005) 381,295 (431,300) (113) % Asia VII 9,400 426,270 (416,870) (98) % THP I 5,381 114,805 (109,424) (95) % THP II 2,529 — 2,529 NM TES 11,618 8,232 3,386 41 % AAF 135,098 32,237 102,861 319 % Platform: Capital 732,335 2,424,539 (1,692,204) (70) % Growth III (1) (47,831) 64,111 (111,942) (175) % Growth IV 21,141 326,824 (305,683) (94) % Growth V 68,890 82,612 (13,722) (17) % TTAD I 455 108,458 (108,003) (100) % TDM 33,305 54,325 (21,020) (39) % Platform: Growth 75,960 636,330 (560,370) (88) % Rise I (16,836) 142,938 (159,774) (112) % Rise II 19,739 69,253 (49,514) (71) % Platform: Impact 2,903 212,191 (209,288) (99) % TREP III 12,728 152,658 (139,930) (92) % Platform: Real Estate $ 12,728 $ 152,658 $ (139,930) (92) % 96 Table of Contents Year Ended December 31, 2022 2021 Change % ($ in thousands) TPEP 9,107 29,804 (20,697) (69) % NewQuest 784 16,186 (15,402) (95) % Strategic Capital (2,793) 2,793 (5,586) (200) % Platform: Market Solutions 7,098 48,783 (41,685) (85) % Total TPG Operating Group Shared: 831,024 3,474,501 (2,643,477) (76) % TPG Operating Group Excluded: TPG IV $ (569) $ 3,580 $ (4,149) (116) % TPG VI (19,913) 32,031 (51,944) (162) % Asia IV 108 1,430 (1,322) (92) % Asia V (42,864) 74,956 (117,820) (157) % MMI 117 1,333 (1,216) (91) % TPG TFP (750) 201 (951) (473) % Platform: Capital (63,871) 113,531 (177,402) (156) % Growth II 8,977 45,141 (36,164) (80) % Growth II Gator 11,731 65,167 (53,436) (82) % Biotech II 203 (342) 545 159 % Biotech III (34,974) 30,681 (65,655) (214) % Biotech IV (533) 1,977 (2,510) (127) % Biotech V — (4,095) 4,095 100 % Platform: Growth (14,596) 138,529 (153,125) (111) % TREP II (17,337) 40,000 (57,337) (143) % DASA - Real Estate (1,507) (1,954) 447 23 % Platform: Real Estate (18,844) 38,046 (56,890) (150) % TSI 124 14,523 (14,399) (99) % Evercare (13,731) 13,731 (27,462) (200) % Platform: Impact (13,607) 28,254 (41,861) (148) % Total TPG Operating Group Excluded (2) $ (110,918) $ 318,360 $ (429,278) (135) % Total Performance Allocations $ 720,106 $ 3,792,861 $ (3,072,755) (81) % ___________ (1) After the Reorganization, we retained an economic interest in performance allocations from the Growth III and Asia VI general partner entities, which entitles us to a performance allocation equal to 10%; however, we intend to allocate the full amount as performance allocation compensation expense.
Year Ended December 31, 2022 2021 Change % ($ in thousands) TPG Operating Group Shared: TPG VII $ 171,926 $ 902,941 $ (731,015) (81) % TPG VIII 445,242 558,759 (113,517) (20) % TPG IX 1,146 — 1,146 NM Asia VI (1) (50,005) 381,295 (431,300) (113) % Asia VII 9,400 426,270 (416,870) (98) % THP I 5,381 114,805 (109,424) (95) % THP II 2,529 — 2,529 NM TES 11,618 8,232 3,386 41 % TPG AAF 135,098 32,237 102,861 319 % Platform: Capital 732,335 2,424,539 (1,692,204) (70) % Growth III (1) (47,831) 64,111 (111,942) (175) % Growth IV 21,141 326,824 (305,683) (94) % Growth V 68,890 82,612 (13,722) (17) % TTAD I 455 108,458 (108,003) (100) % TDM 33,305 54,325 (21,020) (39) % Platform: Growth 75,960 636,330 (560,370) (88) % Rise I (16,836) 142,938 (159,774) (112) % Rise II 19,739 69,253 (49,514) (71) % Platform: Impact 2,903 212,191 (209,288) (99) % TREP III 12,728 152,658 (139,930) (92) % Platform: Real Estate 12,728 152,658 (139,930) (92) % TPEP 9,107 29,804 (20,697) (69) % NewQuest 784 16,186 (15,402) (95) % Strategic Capital (2,793) 2,793 (5,586) (200) % Platform: Market Solutions 7,098 48,783 (41,685) (85) % Total TPG Operating Group Shared: 831,024 3,474,501 (2,643,477) (76) % 105 Table of Contents Year Ended December 31, 2022 2021 Change % ($ in thousands) TPG Operating Group Excluded: TPG IV (569) 3,580 (4,149) (116) % TPG VI (19,913) 32,031 (51,944) (162) % Asia IV 108 1,430 (1,322) (92) % Asia V (42,864) 74,956 (117,820) (157) % MMI 117 1,333 (1,216) (91) % TPG TFP (750) 201 (951) (473) % Platform: Capital (63,871) 113,531 (177,402) (156) % Growth II 8,977 45,141 (36,164) (80) % Growth II Gator 11,731 65,167 (53,436) (82) % Biotech II 203 (342) 545 159 % Biotech III (34,974) 30,681 (65,655) (214) % Biotech IV (533) 1,977 (2,510) (127) % Biotech V — (4,095) 4,095 100 % Platform: Growth (14,596) 138,529 (153,125) (111) % TREP II (17,337) 40,000 (57,337) (143) % DASA - Real Estate (1,507) (1,954) 447 23 % Platform: Real Estate (18,844) 38,046 (56,890) (150) % TSI 124 14,523 (14,399) (99) % Evercare (13,731) 13,731 (27,462) (200) % Platform: Impact (13,607) 28,254 (41,861) (148) % Total TPG Operating Group Excluded (2) $ (110,918) $ 318,360 $ (429,278) (135) % Total Performance Allocations $ 720,106 $ 3,792,861 $ (3,072,755) (81) % ___________ (1) After the Reorganization, we retained an economic interest in performance allocations from the Growth III and Asia VI general partner entities, which entitles us to a performance allocation equal to 10%; however, we intend to allocate the full amount as performance allocation compensation expense.
Interest, Dividends and Other . Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established. Net Gains (Losses) from Investment Activities of Consolidated TPG Funds and Public SPACs.
Interest, Dividends and Other . Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established. Net Gains from Investment Activities of consolidated TPG Funds and Public SPACs .
(7) Gross IRR and Gross MoM are calculated by adjusting Net IRR and Investor Net MoM to generally approximate investor performance metrics excluding management fees, fund expenses (other than interest expense and other fees arising from amounts borrowed under the fund’s credit facility to fund investments) and performance allocations.
Gross IRR and Gross MoM are calculated by adjusting Net IRR and Net MoM to generally approximate investor performance metrics excluding management fees, fund expenses (other than interest expense and other fees arising from amounts borrowed under the fund’s credit facility to fund investments) and performance allocations.
Compensation and Benefits, Net The following table presents compensation and benefits, net for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Salaries $ 197,587 $ 169,552 Bonuses (1) 196,083 342,276 Benefits and other 71,061 71,065 Reimbursements (71,764) (61,480) Total Compensation and Benefits, Net $ 392,968 $ 521,413 ___________ (1) Includes bonus compensation of $140.3 million during the year ended December 31, 2021 for TPG senior professionals.
Cash-Based Compensation and Benefits, Net The following table presents cash-based compensation and benefits, net for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Salaries $ 197,587 $ 169,552 Bonuses (1) 196,083 342,276 Benefits and other 71,061 71,065 Reimbursements (71,764) (61,480) Total Cash-Based Compensation and Benefits, Net $ 392,968 $ 521,413 ___________ (1) Includes bonus compensation of $140.3 million during the year ended December 31, 2021 for TPG senior professionals.
GAAP in that it does not include (i) unrealized performance allocations and related compensation and benefit expense, (ii) unrealized investment income, (iii) equity-based compensation expense, (iv) net income (loss) attributable to non-controlling interests in consolidated entities, or (v) certain non-cash items, such as contingent reserves. While we believe that the inclusion or exclusion of the aforementioned U.S.
GAAP in that it does not include (i) unrealized performance allocations and related compensation and benefit expense, (ii) unrealized investment income, (iii) equity-based compensation expense, (iv) net income (loss) attributable to non-controlling interests in consolidated entities, or (v) certain other items, such as contingent reserves. While we believe that the inclusion or exclusion of the aforementioned U.S.
Management Fees The following table presents management fees in our platforms for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Capital $ 382,992 $ 335,376 Impact 179,742 106,096 Real Estate 153,908 70,442 Growth 141,735 142,388 Market Solutions 71,483 64,062 Total Management Fees $ 929,860 $ 718,364 122 Table of Contents Management fees increased by $211.5 million, or 29%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Management Fees The following table presents management fees in our platforms for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Capital $ 382,992 $ 335,376 Impact 179,742 106,096 Real Estate 153,908 70,442 Growth 141,735 142,388 Market Solutions 71,483 64,062 Total Management Fees $ 929,860 $ 718,364 Management fees increased by $211.5 million, or 29%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
(8) Net IRR represents the compound annualized return rate (i.e., the implied discount rate) of a fund, which is calculated using investor cash flows in the fund, including cash received from capital called from investors, cash distributed to investors and the investors’ ending capital balances as of the quarter end.
(8) Net IRR represents the compound annualized return rate (i.e., the implied discount rate) of a fund, which is calculated using investor cash flows in the fund, including cash received from capital called from investors, cash distributed to investors and the investors’ ending capital balances as of the period end.
Unaudited Pro Forma Non-GAAP Balance Sheet Measures Book assets, book liabilities and net book value are non-GAAP performance measures of TPG Operating Group’s assets, liabilities and equity on a deconsolidated basis which reflects our investments in subsidiaries as equity method investments. Additionally, the book assets, book liabilities and net book value include the tax assets and liabilities of TPG Inc.
Unaudited Non-GAAP Balance Sheet Measures Book assets, book liabilities and net book value are non-GAAP performance measures of TPG Operating Group’s assets, liabilities and equity on a deconsolidated basis which reflects our investments in subsidiaries as equity method investments. Additionally, the book assets, book liabilities and net book value include the tax assets and liabilities of TPG Inc.
(5) Unrealized Value, with respect to an investment in a publicly traded security, is based on the closing market price of the security as of the quarter end on the principal exchange on which the security trades, as adjusted by the general partner for any restrictions on disposition.
(5) Unrealized Value, with respect to an investment in a publicly traded security, is based on the closing market price of the security as of the period end on the principal exchange on which the security trades, as adjusted by the general partner for any restrictions on disposition.
Fair Value of Investments or Instruments that are Publicly Traded Securities that are publicly traded and for which a quoted market exists will be valued at the closing price of such securities in the principal market in which the security trades, or in the absence of a principal market, in the most advantageous market on the valuation date.
Fair Value of Investments or Instruments that are Exchange Traded Securities that are exchange traded and for which a quoted market exists will be valued at the closing price of such securities in the principal market in which the security trades, or in the absence of a principal market, in the most advantageous market on the valuation date.
Additional Contingent Obligations As of December 31, 2022 and December 31, 2021, if all investments held by the TPG funds were liquidated at their current unrealized fair value, there would be clawback of $58.3 million related to STAR, net of tax, for which a performance allocation reserve was recorded within other liabilities in the Consolidated Financial Statements.
Additional Contingent Obligations As of December 31, 2023 and December 31, 2022, if all investments held by the TPG funds were liquidated at their current unrealized fair value, there would be clawback of $58.3 million related to STAR, net of tax, for which a performance allocation reserve was recorded within other liabilities in the Consolidated Statements of Financial Condition.
The secured borrowings contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, default provisions and financial covenants and limitations on certain consolidations, mergers and sales of assets. As of December 31, 2022, we were in compliance with these covenants and conditions.
The secured borrowings contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, default provisions and financial covenants and limitations on certain consolidations, mergers and sales of assets. As of December 31, 2023, we were in compliance with these covenants and conditions.
(3) Reduction in Fee Base represents decreases in the fee basis for funds where the investment or commitment fee period has expired, and the fee base has reduced from commitment base to actively invested capital. It also includes reductions for funds that are no longer fee paying.
(5) Reduction in Fee Base represents decreases in the fee basis for funds where the investment or commitment fee period has expired, and the fee base has reduced from commitment base to actively invested capital. It also includes reductions for funds that are no longer fee paying.
We believe that we have a distinctive business approach as compared to other alternative asset managers and a diversified, innovative array of multi-product investment platforms that position us well to continue generating sustainable growth across our business.
We believe that we have a distinctive business approach as compared to other alternative asset managers and a diversified, innovative array of multi-strategy investment platforms that position us well to continue generating sustainable growth across our business.
Available Capital Available capital is the aggregate amount of unfunded capital commitments that partners have committed to our funds and co-invest vehicles to fund future investments, as well as IPO and forward purchase agreement proceeds associated with our Public SPACs, and private investment in public equity commitments by investors upon the consummation of a business combination associated with our Public SPACs.
Available Capital Available capital is the aggregate amount of unfunded capital commitments and recallable distributions that partners have committed to our funds and co-investment vehicles to fund future investments, as well as IPO and forward purchase agreement proceeds associated with our Public SPACs, and private investment in public equity commitments by investors upon the consummation of a business combination associated with our Public SPACs.
This change was primarily driven by a $9.6 million increase in transaction fees earned from portfolio companies in our Real Estate and Capital platforms and a $5.1 million increase in our Market Solutions platform as a result of increased capital markets activity among our portfolio companies involving our broker-dealer. 95 Table of Contents Expense Reimbursements and Other .
This change was primarily driven by a $9.6 million increase in transaction fees earned from portfolio companies in our Real Estate and Capital platforms and a $5.1 million increase in our Market Solutions platform as a result of increased capital markets activity among our portfolio companies involving our broker-dealer. Expense Reimbursements and Other .
Since fund minimum level of returns are cumulative, previously recognized performance 150 Table of Contents allocations also may be reversed in a period of appreciation that is lower than the particular fund’s minimum return levels. Each fund is considered separately in this regard and, for a given fund, performance allocations can never be negative over the life of a fund.
Since fund minimum level of returns are cumulative, previously recognized performance allocations also may be reversed in a period of appreciation that is lower than the particular fund’s minimum return levels. Each fund is considered separately in this regard and, for a given fund, performance allocations can never be negative over the life of a fund.
This track record presentation is unaudited and does not purport to represent the respective fund’s financial results in accordance with U.S. GAAP. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
An investment in us is not an investment in any of our funds. This track record presentation is unaudited and does not purport to represent the respective fund’s financial results in accordance with U.S. GAAP. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
These decreases were partially offset by an increase in income from our investment in AAF in our Capital platform. Expenses Cash-Based Compensation and Benefits. Cash-based compensation and benefits expense decreased by $106.0 million, or 18%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
These decreases were partially offset by an increase in income from our investment in AAF in our Capital platform. 106 Table of Contents Expenses Cash-Based Compensation and Benefits. Cash-based compensation and benefits expense decreased by $106.0 million, or 18%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
As such, net income available to controlling interest holders is zero for each of these funds following the Reorganization. (2) The TPG Operating Group Excluded entities’ performance allocations is not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us.
As such, net income available to controlling interest holders is zero for each of these funds following the Reorganization. (3) The TPG Operating Group Excluded entities’ performance allocations are not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of their fair values, as follows: • Level 1—Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. • Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of their fair values, as follows: • Level I—Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. • Level II—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies.
Unrealized Gains on Derivative Liabilities of Public SPACs . The $12.4 million and $211.8 million of unrealized gain on derivative instruments recognized during the year ended December 31, 2022 and 2021, respectively, were attributable to warrants issued by the consolidated Public SPAC entities and forward purchase agreements held by third parties.
The $12.4 million and $211.8 million of unrealized gain on derivative instruments recognized during the year ended December 31, 2022 and 2021, respectively, were attributable to warrants issued by the consolidated Public SPAC entities and forward purchase agreements held by third parties.
Expenses of consolidated TPG Funds and Public SPACs consist of interest expense and other expenses related primarily to professional services fees, research expenses, trustee fees, travel expenses and other costs associated with organizing and offering these entities. 92 Table of Contents Investment Income Net Gains (Losses) from Investment Activities .
Expenses of consolidated TPG Funds and Public SPACs consist of interest expense and other expenses related primarily to professional services fees, research expenses, trustee fees, travel expenses and other costs associated with organizing and offering these entities. Investment Income Net Gains (Losses) from Investment Activities .
This change was primarily driven by a $18.4 million increase in additional reimbursements from TPG funds due to increased fundraising activities, $19.8 million in administrative service fees from RemainCo earned during the year ended December 31, 2022, and a $14.9 million increase in income from services rendered to TPG funds and Portfolio Companies. Performance Allocations.
This change was primarily driven by a $18.4 million increase in additional reimbursements from TPG funds due to increased fundraising activities, $19.8 million in administrative service fees from RemainCo earned during the year ended December 31, 2022, and a $14.9 million increase in income from services rendered to TPG funds and Portfolio Companies. 104 Table of Contents Performance Allocations.
Net gains (losses) from investment activities includes (i) realized gains (losses) from the sale of equity, securities sold and not yet purchased, debt and derivative instruments and (ii) unrealized gains (losses) from changes in the fair value of such instruments. Unrealized Gains (Losses) on Derivative Liabilities of Consolidated Public SPACs .
Net gains (losses) from investment activities includes (i) realized gains (losses) from the sale of equity, securities sold and not yet purchased, debt and derivative instruments and (ii) unrealized gains (losses) from changes in the fair value of such instruments. 96 Table of Contents Unrealized Gains (Losses) on Derivative Liabilities of Consolidated Public SPACs .
Investor Net MoM is calculated as the sum of cash distributed to investors and the investors’ ending capital balances as of the quarter end, divided by the amount of capital contributed to the fund by investors (which amount excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital).
Net MoM is calculated as the sum of cash distributed to investors and the investors’ ending capital balances as of the period end, divided by the amount of capital contributed to the fund by investors (which amount excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital).
Interest, dividends and other increased by $2.7 million, or 42%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. 98 Table of Contents Net Gains (Losses) from Investment Activities of Consolidated TPG Funds and Public SPACs.
Interest, dividends and other increased by $2.7 million, or 42%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. Net Gains (Losses) from Investment Activities of Consolidated TPG Funds and Public SPACs.
Total compensation and benefits, net decreased by $128.4 million, or 25%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Total cash-based compensation and benefits, net decreased by $128.4 million, or 25%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Realizations totaled $15.5 billion and were primarily attributable to TPG VII, TPG VIII and Asia VII within the Capital platform, Growth IV within the Growth platform, TRTX and TREP III within the Real Estate platform and Rise I within the Impact platform. AUM also increased due to portfolio appreciation of 8% recognized during the year ended December 31, 2022.
Realizations totaled $14.0 billion and were primarily attributable to TPG VII, TPG VIII and Asia VII within the Capital platform, Growth IV within the Growth platform, TRTX and TREP III within the Real Estate platform and Rise I within the Impact platform. AUM also increased due to portfolio appreciation of 8% recognized during the year ended December 31, 2022.
Performance Allocation Generating AUM refers to the AUM of funds we manage that are currently above their respective hurdle rate or preferred return, and profit of such funds are being allocated to, or earned by, us in accordance with the applicable limited partnership agreements or other governing agreements.
Performance Generating AUM refers to 140 Table of Contents the AUM of funds we manage that are currently above their respective hurdle rate or preferred return, and profit of such funds are being allocated to, or earned by, us in accordance with the applicable limited partnership agreements or other governing agreements.
Management fees generated from the Impact platform increased $73.6 million, due to the activation of Rise Climate in the third quarter of 2021, and Rise III in the second quarter of 2022.
Management fees generated from the Impact platform increased $73.6 million, due to the activation of 117 Table of Contents Rise Climate in the third quarter of 2021, and Rise III in the second quarter of 2022.
Depending on the facts and circumstances associated with the investment, different primary and secondary methodologies may be used including direct capitalization method, option value, contingent claims or scenario analysis, yield analysis, projected cash flow through maturity or expiration, probability weighted methods or recent round of financing.
Depending on the facts and circumstances associated with the investment, different primary and secondary methodologies may be used including direct capitalization method, option value, contingent claims or scenario analysis, yield analysis, projected cash flow through maturity or expiration, probability weighted methods or recent round of financing. 157 Table of Contents Credit Investments .
We have built our firm over 30 years of successful innovation and organic growth, and we believe that we have delivered attractive risk-adjusted returns to our clients and established a premier investment business focused on the fastest-growing segments of both the alternative asset management industry and the global economy.
We have built our firm through more than 30 years of successful innovation and growth, and believe that we have delivered attractive risk-adjusted returns to our clients and established a premier investment business focused on the fastest-growing segments of both the alternative asset management industry and the global economy.
This was primarily attributable to the fundraising activities of TPG IX, Asia VIII and THP II within the Capital platform, Rise III within the Impact platform, TREP IV within the Real Estate platform and TDM within the Growth platform during the year ended December 31, 2022. Capital raised totaled approximately $20.5 billion for the year ended December 31, 2021.
Capital raised totaled approximately $30.0 billion for the year ended December 31, 2022. This was primarily attributable to the fundraising activities of TPG IX, Asia VIII and THP II within the Capital platform, Rise III within the Impact platform, TREP IV within the Real Estate platform and TDM within the Growth platform during the year ended December 31, 2022.
In connection with our IPO, we granted restricted stock units (“RSUs”) to executives and employees.
In connection with our IPO and subsequent acquisition, we granted restricted stock units (“RSUs”) to executives and employees.
Incentive fees are generally calculated as a percentage of the profits earned in respect of certain accounts for which we are the investment adviser, subject to the achievement of minimum return levels or performance benchmarks.
Incentive fees within the scope of the revenue guidance are generally calculated as a percentage of the profits earned in respect of certain accounts for which we are the investment adviser, subject to the achievement of minimum return levels or performance benchmarks.
However, we believe our disciplined investment philosophy across our diversified investment platforms and our shared investment themes focus on attractive and resilient sectors of the global economy have historically contributed to the stability of our performance throughout market cycles.
However, we believe our disciplined investment philosophy across our diversified investment platforms and our shared investment themes focusing on attractive and resilient sectors of the global economy has historically contributed to the stability of our performance throughout market cycles.
Subsequent to the Reorganization and IPO, we account for these distributions as performance allocation compensation. General, Administrative and Other . General and administrative expenses include costs primarily related to professional services, occupancy, travel, communication and information services and other general operating items. Depreciation and Amortization .
We account for these distributions as performance allocation compensation. General, Administrative and Other . General and administrative expenses include costs primarily related to professional services, occupancy, travel, communication and information services and other general operating items. Depreciation and Amortization .
AUM Not Yet Earning Fees represents the amount of capital commitments to TPG investment funds and co-investment vehicles that has not yet been invested or considered active, and as this capital is invested or activated, the fee- 137 Table of Contents paying portion will be included in FAUM.
AUM Not Yet Earning Fees represents the amount of capital commitments to TPG’s funds and co-investment vehicles that has not yet been invested or considered active, and as this capital is invested or activated, the fee-paying portion will be included in FAUM.
Tranche A secured borrowings (the “Series A Securitization Notes”) were issued in May 2018 at a fixed rate of 5.33% with an aggregate principal balance of $200.0 million due June 20, 2038, with interest payable semiannually.
The secured borrowings are separated into two tranches. Tranche A secured borrowings (the “Series A Securitization Notes”) were issued in May 2018 at a fixed rate of 5.33% with an aggregate principal balance of $200.0 million due June 20, 2038, with interest payable semiannually.
The results of all valuations of investments held by TPG funds and investment vehicles are initially reviewed and approved by the relevant Product’s Valuation Committee. Each Product Valuation Committee is comprised of at least one member who does not participate in the process of making or disposing of investments.
The results of all valuations of investments held by TPG funds and investment vehicles are initially reviewed and approved by the relevant subcommittee. Each subcommittee is comprised of at least one member who does not participate in the process of making or disposing of investments.
Accordingly, there was no impact for the year ended December 31, 2022. Total other income increased by $0.4 million, or 1%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Accordingly, there was no impact for the year ended December 31, 2022. 118 Table of Contents Total other income increased by $0.4 million, or 1%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Available capital is reduced for investments completed using fund-level financing arrangements; however, it is not reduced for investments that we have committed to make yet remain unfunded at the reporting date.
Available capital is reduced for investments completed using fund-level subscription-related credit facilities; however, it is not reduced for investments that we have committed to make yet remain unfunded at the reporting date.
The types of financial instruments classified in this category include securities with less liquidity traded in active markets, securities traded in other than active markets, and government and agency securities. • Level 3—Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument.
The types of financial instruments generally classified in this category include 156 Table of Contents securities with less liquidity traded in active markets, securities traded in other than active markets, corporate bonds and loans, and government and agency securities. • Level III—Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument.
Non-Controlling Interests For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than TPG. The aggregate of the income or loss and corresponding equity that is not owned by us is included in non-controlling interests in the consolidated financial statements.
Non-Controlling Interests For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than TPG.
The potential liquidation of STAR in 2023 could require clawback payments. Additionally, if all remaining investments were deemed worthless, a possibility management views as remote, the amount of performance allocations subject to projected clawback as of December 31, 2022 and December 31, 2021 would be $1,869.4 million and $1,500.9 million on a pre-tax basis, respectively.
The potential liquidation of STAR could require clawback payments. Additionally, if all remaining investments were deemed worthless, a possibility management views as remote, the amount of performance allocations subject to projected clawback as of December 31, 2023 and December 31, 2022 would be $1,910.2 million and $1,869.4 million, respectively.
Transaction, monitoring and other fees, net increased by $14.7 million, or 16%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Transaction, monitoring and other fees, net increased by $12.5 million, or 12%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
When an investment is made in another currency, (i) Capital Invested is calculated using the exchange rate at the time of the investment, (ii) Unrealized Value is calculated using the exchange rate at the quarter end and (iii) Realized Value reflects actual US dollar proceeds to the fund.
Unless otherwise noted, when an investment is made in another currency, (i) Capital Invested is calculated using the exchange rate at the time of the investment, (ii) Unrealized Value is calculated using the exchange rate at the period end and (iii) Realized Value reflects actual U.S. dollar proceeds to the fund.
GAAP financial statement amounts due to affiliates and other liabilities within accounts payable, accrued expenses and other for non-GAAP purposes. (2) The $653.6 million and $1,000.0 million redeemable equity, respectively, represent ownership interest in each SPAC that is not owned by the TPG Operating Group and is presented separately from U.S. GAAP partners’ capital in the accompanying Consolidated Financial Statements.
GAAP financial statement amounts due to affiliates and other liabilities within accounts payable, accrued expenses and other for non-GAAP purposes. (2) The $653.6 million redeemable equity represents ownership interest in each SPAC that is not owned by the TPG Operating Group and is presented separately from U.S.
The valuations are subject to final approval by TPG’s Global Valuation Committee, which is comprised of senior employees and includes its Chief Financial Officer, General Counsel, Chief Compliance Officer, Chief Operating Officer and Chief Accounting Officer.
The valuations are aggregated and significant matters are presented for final approval by TPG’s Global Valuation Committee, which is comprised of senior employees and includes its Chief Financial Officer, General Counsel, Chief Compliance Officer, Chief Operating Officer and Chief Accounting Officer.
Net IRR is the discount rate at which (i) the present value of all capital contributed by investors to the fund (which excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital) is equal to (ii) the present value of all cash distributed to investors and the investors’ ending capital balances.
Net IRR is the discount rate at which (i) the present value of all capital contributed by investors to the fund (which excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital) is equal to (ii) the present value of all cash distributed to investors and the investors’ ending capital balances. 148 Table of Contents (9) Net MoM represents the multiple-of-money on contributions to the fund by investors.
Senior Unsecured Term Loan In December 2021, we entered into a credit agreement (the “Senior Unsecured Term Loan Agreement”) pursuant to which the lenders thereunder agreed to make term loans in a principal amount of up to $300.0 million during the period commencing on December 2, 2021 and ending on the date that is 30 days thereafter.
During January 2024, we drew $58.5 million under our Senior Unsecured Revolving Credit Facility. 150 Table of Contents Senior Unsecured Term Loan In December 2021, we entered into a credit agreement (the “Senior Unsecured Term Loan Agreement”) pursuant to which the lenders thereunder agreed to make term loans in a principal amount of up to $300.0 million during the period commencing on December 2, 2021 and ending on the date that is 30 days thereafter.
This change resulted from a $199.3 million increase in management fees, a $54.8 million increase in expense reimbursements and other and a $14.7 million increase in transaction, monitoring and other fees, net. Management Fees . Management fees increased by $199.3 million, or 27%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This change resulted from a $201.5 million increase in management fees, a $54.8 million increase in expense reimbursements and other and a $12.5 million increase in transaction, monitoring and other fees, net. Management Fees . Management fees increased by $201.5 million, or 28%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
We are entitled to a performance allocation (typically 20%) based on cumulative fund or account performance to date, irrespective of whether such amounts have been realized. These performance allocations are subject to the achievement of minimum return levels (typically 8%), in accordance with the terms set forth in the respective fund’s governing documents.
We are entitled to a performance allocation (typically 20%) based on cumulative fund or account performance to date, irrespective of whether such amounts have been realized. These performance allocations are subject to the achievement of preferred returns or high water marks, where applicable, in accordance with the terms set forth in the respective fund’s governing documents.
We also utilize Performance Allocation Generating AUM and Performance Allocation Eligible AUM as key metrics to understand AUM that could produce performance allocations.
We also utilize Performance Generating AUM and Performance Eligible AUM as key metrics to understand AUM that could produce performance allocations or fee related performance revenues.
Transaction, Monitoring and Other Fees, Net The following table presents transaction, monitoring and other fees, net in our platforms for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Market Solutions $ 91,426 $ 91,737 Impact 6,730 4,264 Real Estate 5,181 — Capital 5,094 5,545 Growth 647 495 Total Transaction, Monitoring and Other Fees, Net $ 109,078 $ 102,041 Transaction, monitoring and other fees, net increased by $7.0 million, or 7%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Transaction, Monitoring and Other Fees, Net The following table presents transaction, monitoring and other fees, net in our platforms for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Market Solutions $ 91,425 $ 91,737 Impact 6,730 4,264 Capital 5,094 5,545 Growth 647 495 Total Transaction, Monitoring and Other Fees, Net $ 103,896 $ 102,041 Transaction, monitoring and other fees, net increased by $1.9 million, or 2%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This change was due to the Company now being treated as a corporation for U.S. federal and state income taxes in connection with the Reorganization and IPO, beginning in January of 2022.
This change was due to the Company now being treated as a corporation for U.S. federal and state income taxes in connection with the Reorganization and IPO, beginning in January of 2022. 108 Table of Contents Unaudited Condensed Consolidated Statements of Financial Condition (U.S.
To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds. In the future, we may attempt to raise additional capital through the sale of equity securities or through debt financing arrangements. If we raise additional funds by issuing equity securities, the ownership of our existing investors will be diluted.
In the future, we may attempt to raise additional capital through the sale of equity securities or through debt financing arrangements. If we raise additional funds by issuing equity securities, the ownership of our existing investors will be diluted.
AUM Subject to Fee Earning Growth AUM Subject to Fee Earning Growth represents capital commitments that when deployed have the ability to grow our fees through earning new management fees (AUM Not Yet Earning Fees) or when capital is invested and management fees can be charged at a higher rate (FAUM Subject to Step-Up).
AUM Subject to Fee Earning Growth AUM Subject to Fee Earning Growth represents capital commitments that when deployed have the ability to grow our fees through earning new management fees (AUM Not Yet Earning Fees) or when management fees can be charged at a higher rate as capital is invested or for certain funds as management fee rates increase during the life of a fund (FAUM Subject to Step-Up).
We recognize incentive fee revenue only when these amounts are realized and no longer subject to significant reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period. Capital Allocation-Based Income is a disproportionate allocation (typically 20%) of performance allocations. We account for performance allocations under the equity method of accounting.
We recognize incentive fee revenue only when these amounts are no longer subject to significant reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period. Incentive fees structured as performance allocations are accounted for under the equity method of accounting.
GAAP measures is not adequate due to the adjustments described herein. Our calculations of DE, FRE, fee-related revenue and fee-related expenses may differ from the calculations of other investment managers. As a result, these measures may not be comparable to similar measures presented by other investment managers.
Our calculations of DE, FRE, fee-related revenues and fee-related expenses may differ from the calculations of other investment managers. As a result, these measures may not be comparable to similar measures presented by other investment managers.
Interest Expense, Net The following table presents interest expense, net for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Interest expense $ 21,601 $ 15,728 Interest (income) (7,806) (800) Interest Expense, Net $ 13,795 $ 14,928 The decrease in interest expense, net during the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to higher interest income from interest earned on cash and cash equivalents, partially offset by higher interest rates on certain borrowings. 125 Table of Contents Distributable Earnings The decrease in DE for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to lower realized performance allocations, net, partially offset by a 154% increase in our Fee-Related Earnings.
Interest Expense, Net The following table presents interest expense, net for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 ($ in thousands) Interest expense $ 21,601 $ 15,728 Interest (income) (7,806) (800) Interest Expense, Net $ 13,795 $ 14,928 The decrease in interest expense, net during the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to higher interest income from interest earned on cash and cash equivalents, partially offset by higher interest rates on certain borrowings.
For the year ended December 31, 2022, annualized weighted average management fees as a percentage of FAUM, which represent annualized management fees divided by the average of each applicable period’s FAUM, were 1.35%. FAUM increased from $50.7 billion as of December 31, 2020 to $60.1 billion as of December 31, 2021.
For the year ended December 31, 2022, annualized weighted average management fees as a percentage of FAUM, which represent annualized management fees divided by the average of each applicable period’s FAUM, were 1.35%.
Realized investment income and other, net decreased by $50.7 million, or 55%, resulting from lower realizations of $29.0 million from our investments in TPG funds and the transfer of certain of our strategic investments to RemainCo on December 31, 2021.
Realized investment income and other, net decreased by $50.7 million, or 55%, resulting from lower realizations of $29.0 million from our investments in TPG funds and the transfer of certain of our strategic investments to RemainCo on December 31, 2021. 120 Table of Contents Depreciation Depreciation expense decreased $2.2 million, or 32%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
For funds that engaged in de minimis or no fund-level borrowing, Gross IRR is the discount rate at which (i) the present value of all Capital Invested in an investment or investments is equal to (ii) the present value of all realized and unrealized returns from such investment or investments.
Gross IRR is the discount rate at which (i) the present value of all Capital Invested in an investment or investments is equal to (ii) the present value of all realized and unrealized returns from such investment or investments.
Following our incorporation, the Reorganization and the IPO, we are a holding company and our only business is to act as the owner of the entities serving as the general partner of the TPG Operating Group partnerships and our only material assets are Common Units representing 25.6% of the Common Units and 100% of the interests in certain intermediate holding companies as of December 31, 2022.
Organization We are a holding company and our only business is to act as the owner of the entities serving as the general partner of the TPG Operating Group partnerships and our only material assets are Common Units representing approximately 22% of the legally outstanding Common Units and 100% of the interests in certain intermediate holding companies as of December 31, 2023.
Income Tax Expense As a result of the Reorganization, the Company is treated as a corporation for U.S. federal and state income tax purposes. We are subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of taxable income generated by the TPG Operating Group partnerships.
We are subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of taxable income generated by the TPG Operating Group partnerships.
These termination payments are recognized in the period in which the related transaction closes. Capital Allocation-Based Income (Loss) . Capital allocation-based income (loss) is earned from the TPG funds when we have (i) a general partner’s capital interest and (ii) performance allocations which entitle us to a disproportionate allocation of investment income or loss from investment funds.
Capital allocation-based income (loss) is earned from the TPG funds when we have (i) a general partner’s capital interest and (ii) performance allocations which entitle us to a disproportionate 95 Table of Contents allocation of investment income or loss from investment funds.
Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established.
Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established. Income Tax Expense The Company is treated as a corporation for U.S. federal and state income tax purposes.
FAUM is the sum of all the individual fee bases that are used to calculate our management fees and differs from AUM in the following respects: (i) assets and commitments from which we are not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which we are entitled to receive only performance allocations or are otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in our private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are generally not impacted by changes in the fair value of underlying investments.
FAUM is the sum of all the individual fee bases that are used to calculate our management fees and differs from AUM in the following respects: (i) assets and commitments from which we are not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which the firm is entitled to receive only performance allocations or are otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in our credit and real estate funds, have different methodologies for calculating management fees that are not based on the fair value of the respective funds’ underlying investments.
GAAP to consolidate the majority of investment funds we advise in our consolidated financial statements because we do not have a more than insignificant variable interest. Pursuant to U.S.
GAAP to consolidate the majority of investment funds we advise in our Consolidated Financial Statements because we do not have a more than insignificant variable interest. Following our Reorganization and IPO, we no longer have a controlling financial interest in certain TPG Funds. Public SPACs are consolidated pursuant to U.S. GAAP.
Available capital increased from approximately $25.7 billion as of December 31, 2020 to approximately $28.4 billion as of December 31, 2021.
Available capital increased from approximately $28.4 billion as of December 31, 2021 to approximately $43.0 billion as of December 31, 2022.
Net gains (losses) from investment activities of consolidated TPG Funds and Public SPACs had no activity during the year ended December 31, 2022 compared to a net gain of $23.4 million for the year ended December 31, 2021. Following certain Reorganization activities, we no longer consolidate TPEP as we do not have a controlling financial interest.
Net gains (losses) from investment activities of consolidated TPG Funds and Public SPACs had no activity during the year ended December 31, 2022 compared to a net gain of $23.4 million for the year ended December 31, 2021.
These amounts are generally due on demand, and accordingly, have been presented as obligations payable in the “2023” column. We generally utilize proceeds from return of capital distributions and proceeds from secured borrowings to help fund these commitments.
These amounts are generally due on demand, and accordingly, have been presented as obligations payable in the “2024” column. We generally utilize proceeds from return of capital distributions and proceeds from secured borrowings to help fund these commitments. (4) See Note 9 to the Consolidated Financial Statements for further discussion of the repurchase agreements.
Realized performance allocations, net of $999.6 million for the year ended December 31, 2021 were largely generated from realizations in TPG VII of $501.6 million, TPG VI of $173.5 million and Asia VI of $28.4 million in the Capital platform.
This activity consisted of realizations sourced from portfolio companies including McAfee, Wind River, Kelsey-Seybold Clinics, Greencross, and DirecTV. Realized performance allocations, net of $999.6 million for the year ended December 31, 2021 were largely generated from realizations in TPG VII of $501.6 million, TPG VI of $173.5 million and Asia VI of $28.4 million in the Capital platform.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeChanges in the fair value of the funds’ investments may materially impact performance allocations depending upon the respective funds’ performance to date as compared to its hurdle rate and the related performance allocation waterfall. An immediate, hypothetical 10% decline in the fair value of investments would result in a decrease of performance allocations totaling $1,137.6 million.
Biggest changeChanges in the fair value of the funds’ investments may materially impact performance allocations depending upon the respective funds’ performance to date as compared to its hurdle rate and the related performance allocation waterfall.
In our discussion of “Key Financial Measures” and “Critical Accounting Policies,” we disclose that performance allocations are recognized upon appreciation of the valuation of our TPG funds’ investments above certain return hurdles and are based upon the amount that would be due to TPG at each reporting date as if the funds were liquidated at their then-current fair values.
In our discussion of “Key Financial Measures” and “Critical Accounting Estimates,” we disclose that performance allocations are recognized upon appreciation of the valuation of our TPG funds’ investments above certain return hurdles and are based upon the amount that would be due to TPG at each reporting date as if the funds were liquidated at their then-current fair values.
We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets. 154 Table of Contents
We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets. 160 Table of Contents
Based on our debt obligations payable as of December 31, 2022, we estimate that interest expense relating to variable-rate debt would increase by approximately $2.0 million on an annual basis in the event interest rates were to have been one percentage point during the period.
Based on our debt obligations payable as of December 31, 2023, we estimate that interest expense relating to variable-rate debt would increase by approximately $2.9 million on an annual basis in the event interest rates were to have been one percentage point during the period.
An immediate, hypothetical 10% decline in the fair value of investments would result in a decrease of investment income totaling $62.8 million. 153 Table of Contents Exchange Rate Risk Our investment funds hold investments that are denominated in non-USD currencies that may be affected by movements in the rate of exchange between the USD and non-USD currencies.
An immediate, hypothetical 10% decline in the fair value of investments would result in a decrease of investment income totaling $91.7 million. Exchange Rate Risk Our investment funds hold investments that are denominated in non-USD currencies that may be affected by movements in the rate of exchange between the USD and non-USD currencies.
We estimate that as of December 31, 2022, if the USD strengthened 10% against all foreign currencies, the impact on our consolidated results of operations for the year then ended would be as follows: (a) performance allocations would decrease by $294.9 million and (b) net gains from investments would decrease by $17.9 million.
We estimate that as of December 31, 2023, if the USD strengthened 10% against all foreign currencies, the impact on our consolidated results of operations for the year then ended would be as follows: (a) performance allocations would decrease by $446.3 million, or $59.9 million net of accrued performance allocation compensation and other allocations and (b) net gains from investments would decrease by $22.5 million.
Effect on Investment Income Investment income is earned from our investments in TPG funds and other investments. We record these investments under the equity method of accounting and recognize our pro rata share of income.
We record these investments under the equity method of accounting and recognize our pro rata share of income.
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An 159 Table of Contents immediate, hypothetical 10% decline in the fair value of investments would result in a decrease of performance allocations totaling $1,900.6 million, or $335.9 million net of accrued performance allocation compensation and other allocations. Effect on Investment Income Investment income is earned from our investments in TPG funds and other investments.
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In our capacity as investment manager, certain of the funds we manage may seek to mitigate risks from this exposure by employing hedging techniques, including using foreign currency options and foreign exchange forward contracts to help insulate us from future changes in exchange rates.
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This may include hedging amounts in excess of our capital invested, to reduce exposure on projected unrealized on projected unrealized investment profits.

Other TPG 10-K year-over-year comparisons