TPG Inc. Q4 FY2024 earnings call

Remembrance of David Bonnerman: He co-founded TPG in 1992, was a legendary investor and innovative leader, and his legacy will be honored. ### 2024 Progress: - Entered the year with the acquisition of Angelo Gordon and successfully integrated the firms. - Raised $30 billion in 2024, a 54% increase from 2023 pro forma. - Achieved organic growth, including raising nearly $2 billion for the Norworld GP-led secondary fund and launching the RISE Climate Transition Infrastructure Fund with $2 billion in anchor commitments. - Deployed $33 billion and realized $23 billion across the firm. ### Fourth Quarter and Full-Year 2024 Highlights: - Strong capital formation with $30 billion raised, including $14 billion in private equity and infrastructure. - First close for the Norville RISE Climate Transition Infrastructure Fund with $2 billion in anchor commitments. - Credit raised over $12 billion, exceeding the $10 billion target. - Organic innovation with new funds like the hybrid solutions fund and Tika mid-cap strategy. - Robust deployment in various strategies, including TPG Capital's acquisition of Surescripts and Intersect Power's partnership with Google. - Monetization of $23 billion in 2024, with $7 billion in the fourth quarter. - Global partner meeting discussed doubling AUM to $500 billion over the next several years.

TPG reported GAAP net income attributable to TPG Inc. of $13 million and after-tax distributable earnings of $261 million or $0.62 per share of Class A common stock for the fourth quarter. In 2024, they raised $30 billion in capital formation, a 54% increase from 2023 on a pro forma basis. Private equity and infrastructure fundraising totaled $14 billion, and credit raised over $12 billion. Deployment was $33 billion for the year, with $10 billion in the fourth quarter. Realizations were $23 billion for the year, with $7 billion in the fourth quarter. Fee-related revenue in the fourth quarter was $461 million, and full-year fee-related revenue (FRR) was $1.8 billion, up 37% year over year.

2025 Outlook: - Expect significantly more capital raised in 2025 compared to 2024, driven by credit platform scaling, climate and infrastructure campaigns, TPG growth campaign, and next flagship buyout funds. - Anticipate growth in capital markets revenue from expanded product expertise. - FRE margin expected to decline modestly in the first quarter but expand throughout the year, ending 2025 in the mid-forties. - Plan to launch new evergreen private equity vehicle targeting the retail channel. - Continue evaluating inorganic opportunities to increase scale and diversification.

Q: Ken Worthington with JPMorgan asked about where TPG places a bigger presence in opportunities for insurance among growth drivers like credit, climate, growth, and wealth, and themes from the annual TPG Partners meeting.

A: Jon Winkelried said there are five core growth drivers: growing core, organic innovation, inorganic additions, wealth penetration, and insurance.

Q: Alex Blostein with Goldman Sachs asked about balance sheet light/light capital when evaluating insurance opportunities and importance of partnerships.

A: Jon Winkelried said they are open-minded, mindful of balance sheet considerations, and partnerships are evolving, with insurance being in dialogue with traditional companies.

Q: Michael Cyprys with Morgan Stanley asked about doubling AUM over several years, meaningful drivers, organic vs inorganic growth, and inorganic hurdles.

A: Jon Winkelried said time frame is several years, drivers include fund over fund growth, organic innovation, etc., and inorganic additions like infrastructure and geographic expansion are considered with high quality bar.

Q: Glenn Schorr with Evercore asked about FRE alongside asset growth and defining significantly more capital raised in 2025.

A: Jon Winkelried said FRE follows strategy growth and stair steps, Jack Weingart added FRE should expand faster than AUM with operating leverage.

Q: Brian Bedell with Deutsche Bank asked about impact of Intersect Power partnership and potential for more impact platform partnerships.

A: Jim Coulter talked about Intersect Google relationship, portfolio effects, international opportunities, grid growth, and investment opportunities.

Q: Mike Brown with Wells Fargo Securities asked about quarter-over-quarter movement in 1Q and forecast.

A: Jack Weingart said moderate growth in first quarter, accelerating toward back half of the year with activation of new funds.

Q: Arnaud Gidloth with BNP asked about Intersect economics and bridging AUM/FAUM growth.

A: James Coulter said Intersect is a fund-level investment, Jack Weingart said co-invest vehicles are part of business, table stakes for LPs.

Q: Dan Fannon with Jefferies asked about credit performance growth outlook post-integration.

A: Jon Winkelried said it's early days in maximizing combination, with ongoing dialogues with large pools of capital and potential for significant incremental allocations.