Filed under: Texas Pacific Group, Private equity industry, Public or private?
David Bonderman, a founding partner of TPG Capital (formerly the Texas Pacific Group), recently said that he has no immediate plans to take his firm public. However, he did indicate that virtually all of the major private equity firms will probably be public companies within five years. If that’s the case, he hopes TPG will be one of the last to go that route.
“Being public is not my favorite thing,” Bonderman stated in an interview with Reuters. Indeed, it is odd that aggressive investors who profit largely by taking public companies private would want to go public. Bonderman stated that is a “delicious irony” that the Blackstone Group (NYSE: BX), among others, went public even as it continued taking other firms private.
So why do private equity firms go public? The answer is simple: it’s where the money is. Going public grants investment firms to gain access to massive — and liquid — capital markets. Of course, it also provides GDP-sized payout to the principals. But as Blackstone has shown, it doesn’t necessarily mean that the firms suddenly have to become more transparent. As Malon Wilkus, the CEO of American Capital Strategies, says in this interview with The Wall Street Journal, “The management company doesn’t have to provide much transparency about the individual investments at all. They probably don’t have to give details on the returns of the funds.” And if the reporting requirements that come with being publicly traded companies prove to be too onerous, the firms can always profit by doing what they do best: they have the ability to take themselves private once again.
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