TPG Inc. Q1 FY2025 earnings call

Acquisition of Peppertree - Announced acquisition of Peppertree Capital Management, a leading specialized digital infrastructure manager with over 8,800 towers in portfolio, $8B AUM. Complementary to TPG's communication sector expertise, expected to be accretive to earnings. ### Market Environment - Broader market volatility due to tariffs, policy uncertainty, affecting earnings growth, M&A, equity valuations. TPG focused on executing business, deploying capital. ### Portfolio - Minimal first order risk to tariffs, private equity portfolios outperforming market with 18% revenue growth, Credit platform's Twinbrook direct lending with limited tariff exposure, Real Estate portfolio appreciated 7% in Q1. ### Capital Formation - Expect to raise more capital than last year. Credit platform seeing acceleration in commitments, private equity campaigns for new funds, Impact platform with ongoing fundraises, Real Estate's fourth European fund closed successfully. Established largest strategic partnership for $4B+ capital. Private wealth strategy making progress with TPOP launch. ### Deployment - $7.3B capital invested in Q1, including acquisitions in various sectors. Credit deployment strong, Real Estate with $13B dry powder. ### Realizations - Successful exits including Viking Cruises, Lifetime Fitness, public listings, and sales of portfolio companies.

TPG reported GAAP net income attributable to TPG Inc. of $25 million and after tax distributable earnings of $187 million or $0.48 per share of Class A common stock. Fee-related revenues in the first quarter were $476 million, including $413 million of management fees and $54 million of transaction fees. Fee-related earnings were $182 million with an FRE margin of 38%. Total assets under management were $251 billion, increasing 12% year-over-year. Fee-earning AUM at quarter end was $143 billion, and performance eligible AUM was $212 billion, with net accrued performance balance exceeding $1 billion.

Capital Raising - Expect to raise significantly more capital than last year, with campaigns elongating but confident in objectives. ### FRE Margin - Expect FRE margin expansion in back half of year, exiting at mid-40s. ### Peppertree Acquisition - Expect transaction to be immediately accretive to FRE and after tax PE per share, with attractive margin profile and management fee growth.

Market Volatility - Broader industry dynamics and macro uncertainty pose risks. ### Fundraising Timelines - Climate-related strategies face elongated timelines due to U.S. policy uncertainty. ### Portfolio Exposure - Uncertainty around economic conditions and market fluctuations affect portfolio performance and deployment.

Q: About private wealth channel, expected flow contribution from TPOP and TCAP?

A: TPOP launch in June, flows to be discussed in next quarterly call. TCAP flows increasing, with increased engagement in private wealth channel.

Q: On transaction and other fees, status of capital markets build out?

A: Capital markets capability embedded in businesses, with more growth ahead as integrated with deal teams.

Q: On private equity fundraising, confidence in getting first closes?

A: Differentiated portfolio construction, strong performance, DPI, and client trust give confidence, with strategic partnerships and customized solutions aiding fundraising.

Q: On credit scale broadening, plans for Twinbrook and CLO?

A: Twinbrook growing with smaller borrowers, CLO platform expanding with new hires, and looking to grow in Europe.

Q: On impact platform, U.S. vs outside policy uncertainty?

A: Global perspective with U.S. policy uncertainty causing elongated sales cycles, but global clean energy spending strong, with opportunities outside U.S. and in U.S. despite noise.

Q: On Peppertree acquisition, fee-earning AUM and fund progression?

A: FAUM in $4.5B-$5B range, average fee rate 1.5%-2%, next fund expected next year.

Q: On geographic diversification and China exposure?

A: Clients evaluating geographic diversification, China exposure less than 2% of total AUM, with presence maintained for regional trade reasons.

Q: On FRE margin and Peppertree accretion?

A: Elongation of fundraising built into model, Peppertree not yet built into margin models but expected to be accretive