Private equity, public markets… SF-based private-equity firm TPG went public yesterday in this year’s first major initial public offering. PE firms like TPG invest $$ in private companies, just like venture-capital firms. But they have different parenting styles: VCs usually invest in startups and let them run things their way (free-range parenting), while PEs invest in or buy mature companies and try to improve them (more like helicopter parents).
- TPG owns a stake in 280 companies worth $109B, up 81% from five years ago. Fun fact: It bought Petco in 2006.
- TPG stock jumped 15% on its opening day of trading, pushing its market cap to $10B — a good sign for 2022’s IPOs.
Show me the acronyms… In 2021, assets managed by private equity and venture capital funds grew 10%, on average, and TPG’s jumped 21%. VCs invested $675B+ in startups, double 2020′s previous record. But at the end of the year two-thirds of 2021 IPOs were below their listing prices, which wasn’t great for retail investors. Still, many unicorns are expected to IPO this year as antitrust pressure makes mergers difficult and SPACs fall out of favor. PE-backed Chobani and VC-backed Reddit have already filed IPO paperwork.
Private equity isn’t private anymore… Historically, TPG’s cash arsenal came from private investors, who were also the ones to benefit from its growth. But now TPG is public, along with other publicly listed PE powerhouses like $144B Blackstone, $61B KKR, and $19B Carlyle. Berkshire Hathaway is also basically a publicly traded PE firm (managed by Warren Buffett). Former Tinder owner IAC operates in a similar way.