TPG, one of the world's largest alternative asset management firms, is raising capital for its newly launched real estate credit platform as it begins actively investing at a time when other firms significantly pull back in commercial real estate lending.
The firm has a "robust" origination pipeline across all of its credit platforms as borrowers seek alternatives to public debt financing, according to TPG CEO Jon Winkelried.
"As we look ahead in areas such as real estate, we expect to see more attractive assets for sale this year that would otherwise typically not come to market, as companies find themselves under increasing pressure for liquidity," Winkelried told investors during the firm's fourth-quarter earnings call on Tuesday.
TPG's recent investment in a pair of Toronto-area industrial parks is an example of real estate that might not have been for sale in a different financial environment, Winkelried said.
"Given the dynamics of higher interest rates, declining asset values and a significant pullback in commercial real estate lending ... our strategy is purpose-built for this part of the cycle, and we intend to continue to raise capital in 2024," Winkelried said.
TPG AG Real Estate had $7.3 billion in dry powder at the close of the year, with dedicated funds in the United States, Europe and Asia, as well as about 200 operating partners. Beyond the real estate platform, Winkelried said TPG has $51 billion of "dry powder to deploy into what we view as an improving market backdrop."
TPG, which maintains dual headquarters in San Francisco and Fort Worth, Texas, closed on the acquisition of Angelo Gordon in November.
TPG is also launching its climate transition infrastructure fund with the help of a newly hired executive. Scott Lebovitz is expected to join TPG as its new partner and head of infrastructure for TPG Rise Climate, the firm's climate investing platform, by the second half of 2024.
Lebovitz, who will be based in New York, most recently served as global co-head and co-chief information officer of infrastructure investing at Goldman Sachs.
TPG isn't the only asset management firm seeking to tackle climate transition infrastructure with Brookfield Asset Management recently announcing it has raised a $10 billion fund for climate transition infrastructure, making it the world's largest transition investor, the firm said. BlackRock also recently acquired Global Infrastructure Partners in a $12.5 billion deal and General Atlantic recently purchased sustainable infrastructure investor Actis.
TPG is adding to its investment funds for this part of its business with a recently announced $1.5 billion commitment from an Abu Dhabi-based climate-focused investment manager.
Winkelried said he plans to remain cautious this year because of the uncertain macro environment as well as significant geopolitical tensions, increasing valuations and the anticipation of Fed policy decisions. But so far, the firm is off to an active start.
"We are engaged in high-quality dialogue with many existing and new clients, and we see a number of levers to drive further growth and innovation across our business," Winkelried added.