Willmann, who has worked at TPG for more than 18 years, said its origins helped create a different culture from other investment firms and which Willmann called “stay-rich investing.”
He noted that the company had an office in Shanghai before it opened an office in New York.
The business now has a US$270 billion alternative assets portfolio and employs about 2,000 people in 30 offices around the world.
“We like to say we’re big enough, but not too big,” Willmann said.
The company has worked with nine of the world’s top 10 sovereign wealth funds and 23 of the top 25 pension funds in the US.
Harbour has chosen to partner with TPG to create its Hunter Global Private Equity Fund to help Harbour to diversify away from the concentrated NZ market – the fund is available to wholesale investors only.
Willmann said private equity has outperformed the S&P 500 Index by between 200 and 400 basis points in 85% of the years since 1991.
The number of listed companies has been shrinking, providing even more of an imperative to access investment in companies that aren’t listed, and returns from public markets have become highly concentrated – about 40% of the returns from the S&P 500 Index are currently coming from just seven stocks.
In 2024, the number of publicly traded companies in the US had shrunk to about 4,300 from a peak of about 7,300 in 1996 but there are about 37,000 private companies in the US.
“Our hunting ground is vastly larger” and TPG looks to invest in companies before they become public companies, Willmann said.
When outsiders criticize private equity as being risky, Willmann pointed to the current trading multiples of listed stocks in the mid-40s and asked: “Riskier than what?”
TPG’s investments typically come with board seats and so it can guide and control what its investee companies do, giving it hands-on opportunities to improve their operational performance.
TPG tends to focus on particular sectors, such as healthcare, technology, electronics and business services, and has developed deep knowledge of those sectors.
It will study every company in a particular sector to establish where the headwinds and tailwinds are and it focuses “on buying what we want to buy, not necessarily on what’s for sale.”
A lot of TPG’s deal flow comes directly from its strategic partnerships and it aims to have a “partner of choice” reputation.
This gives it access to proprietary transactions and corners of the market that are generally not available to anyone else.
It looks for embedded growth opportunities that require high sophistication to unlock a reliable pool of potential investments.
TPG has a history of carve-out transactions. For example, it was involved in the spin-out of internet security firm McAfee from computer chips company Intel in 2017.
It seeks to accelerate investee companies’ growth through operational improvements and about 75% of its returns come from that.
TPG has achieved 3.5 times the revenue growth of the S&P 500 Index companies.
Another example of a TPG investment is its US$950 million investment in Surescripts, a company that processes about 98% of US medical prescriptions which was created by pharmacy companies, insurance companies and healthcare providers.
Before TPG’s involvement, Surescripts hadn’t been run for profit but TPG had formed a relationship with it back in about 2010, knowing that at some stage it would need institutional capital.
TPG became Surescript’s majority shareholder in 2024.
Another example is its purchase in a majority stake in Elite, which provides practice management systems to law firms, bought from Thomson Reuters in 2023.
TPG does between 45 and 50 transactions a year and its average hold period of investee companies is a little over four years.
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