Bain, TPG Go Long in Major Push into Public Equities

Jan 15, 2020 '

Bain, TPG Go Long in Major Push into Public Equities

Bain Capital and TPG have rolled out new vehicles focused on long-hold public equities – aiming for billions of dollars in new capital and further blurring the lines between the public and private equity markets.

Bain’s new Public Equity Global Long Equity Fund and TPG’s Public Equity Partners Long Opportunities strategy – both registered as hedge funds last year with the Securities and Exchange Commission – are expanding on existing hedge business lines at each firm, but are going after investments intended as long holds. TPG also is launching a new Strategic Capital Fund that will buy minority stakes in public companies, according to a Bloomberg News report.

Private equity investors haven’t been clamoring for their managers to spread into the hedge fund and long-only markets, says Alan Kosan, senior v.p. and head of alpha investment research at Segal Marco Advisors. But there clearly is further convergence as big asset managers focused on the public or private equity markets march into the other’s turf, he says.

“We will see more private equity firms invest in public equities, and more [traditional long-only] public equities managers investing in private equity,” he says. “It’s hard to say it’s a bigger trend at this point, though we see more firms confident that they can execute in new [sectors]… and it’s likely to happen more in the future. But we haven’t seen a lot of traction yet from [investors] following a manager on the private side into the public side.”

Bain’s open-end fund had sold about $23.5 million when the manager first registered it with the SEC in October, but is targeting $5 billion to $7 billion for the vehicle at full capacity, according to Bloomberg. The filing lists Joshua Ross, a managing director on the public equity team who joined Bain in 2016 from Och-Ziff Capital Management, as the new fund’s lead investment principal.

TPG’s long opportunities fund, first registered with the SEC in May 2019, had raised $1.2 billion, according to updated filings in late December. It is part of the TPG Public Equity Partners (TPEP) division, which in its last Form ADV filing in March 2019 presaged the launch, noting “we expect to form ‘long only’ investment vehicles that only hold long positions in the public equity securities included in other TPEP Funds’ long portfolios.” The ADV also noted that its TPEP funds “have a broad mandate to invest in publicly traded equities globally across all sectors and market capitalizations.”

TPG’s strategic capital fund, which is not part of the TPEP group, will aim to build minority positions of at least 5% in large companies, with a goal of gaining board seats and playing a constructive activist role on corporate governance and environmental matters.

Other private equity managers have made their own forays into public equities investing in recent years, including Apollo Global Management,

which has built a $7 billon total return fund, and Providence Equity Partners, which last year launched a new hedge fund strategy.

It’s not a big leap for buyout managers to believe they can translate their private company research techniques into the public equity sector, and some have been doing so for years, Kosan says. While public equities managers often look at earnings per share and top line revenue growth data, and private equity shops focus on EBITDA growth and multiple expansion, there are “commonalities” in that both are vetting management teams, business plans, sector dynamics, and individual company positioning, he says.

“You see why [private fund managers] want to export their knowledge of company sectors and valuations into the public domain,” he says. “At the end of the day, the target is if the company can grow revenue or earnings or profits. It’s about identifying companies that are competitive and have the potential to grow the top line and bottom line.”

The moves also reflect the larger trend of big private equity managers spreading into other asset classes, especially with real estate, private debt, and hedge fund strategies, says Alan Pardee, a managing partner at Mercury Capital Advisors, a placement agent.

“We certainly have seen more product proliferation at the large private equity firms,” he says. “The bigger the firm is, the more product they have.”

Larger private equity managers may have an edge in such crossover efforts, because they can build a deeper team to work on new funds, Pardee says. “People are going to trust the big platforms to do something interesting, whereas a smaller manager might find it a tougher thing to accomplish,” he says.

But investors still naturally hesitate to embrace alts manager moves into other asset classes, Pardee says. “[Limited partners] are generally uncomfortable with hedge funds launching private equity funds and private equity funds launching hedge funds,” he says.

Investors will likely question whether any buyout manager launching a public equities product has established the proper investment process, shows an adequate level of commitment to a new investing mode, and has built up sufficient staff for the function, Kosan says. It may take a lot to convince investors to not simply award their public equities mandates to the traditional managers in that market, he says.

“It’s up to the private equity firm to make the case it has the expertise,” he says. “The backdrop here is the search for active management capabilities. There can be some appeal if it’s crafted appropriately with the right sponsorship and the right thesis.”

Jun 03, 2020

Opportunity-Zone Funds Gaining Momentum

After a slow start, managers of opportunity-zone funds have been raising capital at an accelerated rate, according to Real Estate Alert’s second-annual review of the sector. Twenty-two sponsors working independently…

Apr 22, 2020

Oaktree Leads Rush of New Distressed Funds Seeking $30B

A wave of distressed debt and special situations funds has hit the market in recent weeks in response to the Covid-19 pandemic downturn, jumpstarting a segment that had dwindled to…

Apr 08, 2020

Crisis Sidetracks Fund Shops’ Equity Raises

The coronavirus chaos is taking its toll on fund managers’ capital campaigns. Operators across the country are postponing initial and final closes, or discuss­ing doing so, as investors focus on…

Mar 20, 2020

PE giants eyeing 2 opportunities amidst COVID

We talked to 14 private-equity insiders about how they’re planning to play the coronavirus turmoil. They identified 2 huge opportunities. Market chaos is creating crises and opportunities. Private-equity firms are…

Mar 20, 2020

LPs Slow Pledges to Debt Vehicles

Demand for high-yield-debt funds appears to have softened in the past year. The amount of equity raised by active closed-end vehicles is down for the first time since 2013, according…

Mar 18, 2020

Investors Tap the Brakes on Fund Commitments

After several years of explosive growth, the market for high-yield real estate funds is slowing. The total amount of equity managed in closed-end funds fell for the first time since…

Jan 15, 2020

Bain, TPG Go Long in Major Push into Public Equities

Bain Capital and TPG have rolled out new vehicles focused on long-hold public equities – aiming for billions of dollars in new capital and further blurring the lines between the…

Aug 21, 2019

Brookfield Grabs Quick $1B in New ‘Special Opps’ Push

By Tom Stabile Brookfield Asset Management raised a quick $1 billion last quarter in a new wide-angle special opportunities fund – aiming for a less travelled product area in which…

May 31, 2019

Why Investcorp is buying Mercury

We don’t often see managers buying placement agents, but in this instance the rationale is clear. In an industry in which growth is currently the norm (spoiler alert: our PEI…

May 23, 2019

Mercury Capital Advisors Group Announces Strategic Investment by Investcorp

Mercury Capital Advisors Group, L.P. (“Mercury”), one of the world’s elite institutional capital raising and investment advisory firms specializing in alternative investments, today announced that it has entered into a…

May 01, 2019

Private Briefing: Young PE Firms Double Down On Entrepreneurship

When Alex Navab left KKR & Co. LP (KKR) two years ago after running the firm’s Americas private equity unit, his resume would have opened doors at the largest PE…

Apr 10, 2019

PEI: Side Letter

Mercury rising. Mercury Capital Advisors has tapped Tom Donovan as a partner and one of three co-heads of global distribution. Donovan, whose CV includes stints at Lazard, Rede Partners and Credit…

Jan 23, 2019

Distressed Debt Funds Slide Back into Spotlight

Distressed debt managers are primed for a new round of fundraising this year as investors see global economic hiccups setting the table for investments into troubled companies and deals. And…

Oct 09, 2018

Q3 Secondaries Fundraising Hits Second-Biggest High

Five secondaries funds closed in Q3 2018, compared with seven in the same period of 2017, withLandmark XVI the biggest. Secondaries funds raised a shade less in the third quarter…

Aug 31, 2018

Twenty Fundraisers with Pulling Power

Who would you want to be working alongside if you had a pool of private debt capital to raise? From that question, we identified some of the industry’s key players…

Aug 27, 2018

Public Pensions Flood Secondary Market with PE-Fund Stakes

Public pensions are loading up the secondary market with limited-partner interests in an environment of pricing as high as it’s ever been, according to Buyouts research and interviews with secondary-market…

Aug 14, 2018

AlpInvest Becomes First Outside Investor in Ex-Clinton Adviser’s Firm

AlpInvest Partners led a $260 million capital infusion in Stagwell Group, the investment firm launched by ex-Bill Clinton adviser Mark Penn, as part of a secondary process, the firms confirmed…

Aug 14, 2018

Stagwell Media LLC Secures $260 Million Investment From AlpInvest Partners

WASHINGTON, Aug. 14, 2018 /PRNewswire/ — The Stagwell Group and AlpInvest Partners today announced the completion of a $260 million capital raise by Stagwell Media LLC from investment funds managed…

Aug 10, 2018

The Private Equity Boss Who has to Handle Elon Musk

Antonio Gracias, the Tesla lead independent director dealing with the madcap buyout proposal launched by Elon Musk this week, is a private equity investor who has profited from a decades-long…

Apr 30, 2018

How Technology is Opening Private Equity to the Taxable Investor

MERCURY CAPITAL iFUNDS Launched this year, iFunds provides the same $100,000 entry point to the Qualified Purchaser (QP)as its peers, but with a Wall Street tint. The firm markets its…

×

By clicking on this link you will leave the Mercury Capital Advisors, LLC (“Mercury”) website and be taken to a website owned and operated by third parties. These links are provided for your information and convenience only and are not an endorsement by Mercury or the Mercury iFunds™ platform. Mercury has no control over the contents of any linked website and is not responsible for these websites or their content or availability. Mercury therefore makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, the information contained on them or the suitability or quality of any of their products or services.

Accept