TSL Express Daily News

TPG Inc. blew through an earlier goal to raise more than $6.2 billion for a fund that will invest in privately negotiated debt deals as it capitalizes on looming maturities and higher financing costs.

Its TPG Credit unit, previously Angelo Gordon’s credit platform, exceeded a $4.5 billion target for its third Credit Solutions Fund, double the size of the previous vintage. The firm’s managers will originate bespoke debt financings for public and private borrowers, as well as private equity portfolio companies, according to Ryan Mollett, TPG’s global head of credit solutions.

Such deals can offer borrowers flexible ways to address looming debt maturities as many struggle to repay loans. TPG, which manages about $286 billion, said it’s capitalizing on a multi-year opportunity driven by higher debt costs, upcoming maturities and limitations on the types of financing available in traditional capital markets.

“Demand for our capital right now is immense,” Mollett said in an interview.

The deals will be highly structured, with TPG lending against specific assets or carve-outs of businesses, he said, adding that the loans can be held on or off of the borrowers’ balance sheets. Coupons on such debt are typically in the high single-digit to low double-digit percentages.

“Others involve assets in unrestricted subsidiaries, new assets from acquisitions or unencumbered collateral such as inventory and receivables,” Mollett said.

Angelo Gordon

TPG bought credit shop Angelo Gordon in 2023 for $2.7 billion to further expand its lending business within credit and real estate.

Recent deals include a $1 billion term loan for Altice USA, alongside Goldman Sachs Group Inc. TPG also invested in Elon Musk’s artificial intelligence startup, xAI.

The strategy, which hinges almost entirely on credit — with a small equity component — will typically involve investing in deals ranked as senior secured.

Many of the fund’s larger investors, known as limited partners, are asking for co-investment opportunities, according to Mollett.

“We expect to see more deal sharing among larger players who can source and originate at scale,” he said.

While the strategy can move between public and private markets, the bigger opportunity lies in the latter, said Mollett, calling it “far more attractive” from a risk-return perspective.

“We look to create win-win situations,” he added. “That stands in direct contrast to classic distressed strategies that focus on buying debt at a discount and taking ownership. That’s not what we do.”