Surpassing its fundraising target of $2.75 billion in five months, TPG Growth, the middle market and growth equity investment platform of leverage buyout investment group TPG, and a backer of Silicon Valley trailblazers like Uber and Airbnb, has raised its third global fund with $3 billion in aggregate capital commitments.
“We never allocate to a country or sector, but India is becoming a far more exciting economic landscape and globally interconnected. Anybody looking at growth opportunities will find it hard to ignore,” said William “Bill” E McGlashan, Jr, founder & managing partner of TPG Growth.
“But we have flexibility to park the entire $3 billion in India, if we get the right deal and the right value.” added McGlashan.
“We don't want to look macho and start writing large cheques. We want to build companies along with their founders. Maybe we will ride a bigger cheque on our way out,” said Manish Chokhani, investment banking rainmaker-turned chairman of TPG Growth in India.
Ten-year-old TPG Growth was carved out of its $66 billion behemoth parent to specialise in smaller-sized transactions, typically in the $25-$100 million range. The mandate ranges from traditional “growth equity” investments for control of companies to taking minority stakes and seats on corporate boards in businesses with significant prospects for growth.
McGlashan, an avid Indophile, is associated with the TPG Growth firm for over a decade and brought in rock stars Bono and the Edge of U2 as investors in guitar maker, Fender, another portfolio company. He himself became a PE founder after several stints as a venture capitalist and an entrepreneur who founded a health supplements company.
He had moved bag, baggage and family to Mumbai for a year in 2013 to get a first-hand taste of the local market and be close to his own deal team.
TPG has been most active with five investments across its growth and larger investment platforms. TPG Growth alone has invested close to $60 million in two new and one follow-on deals. Sectors shortlisted too have been diversified, from branded eyewear to auto dealerships. ATM solutions provider and portfolio company AGS Technologies has also filed for an IPO. In the past six years, TPG Growth has made seven bets in India.
“The challenge in India remains valuation dynamics, not opportunity. Indians are increasingly looking at building global companies. Success begets success. This is in sync with sectors we like, healthcare, internet, telecom-media-tech, financial services and retail & consumer,” acknowledged McGlashan.
TPG Growth is evaluating the Indian consumer internet startups quite actively, many of which are at an “interesting cusp in their evolution”.
“India has always been strong on tech outsourcing. Many of the internet ventures are still just beginning to take off. But internet and media is one those compelling sectors today. We are actively looking at a few companies,” continued McGlashan.
While speaking on the valuation, McGlashan said, “In nine months, valuations touched $18 billion.”