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Lexington leads $1b stapled secondary for TPG Asia

Monday, December 10, 2018

Lexington Partners has backed a GP-led tender offer for TPG Capital’s fifth and sixth Asia funds, taking out existing positions held by LPs and investing new capital into the firm’s seventh pan-regional vehicle. The transaction represents a total capital commitment of around $1 billion.

TPG is the largest financial sponsor globally to use the secondary market in this way. The transaction is also by some distance the biggest tender-plus-staple completed in Asia. It underlines a broader trend whereby managers are using fund restructurings for strategic purposes – taking advantage of different pools of capital with different risk-reward and timelines to offer a liquidity option to LPs – rather than as a means of survival.

TPG launched a competitive process over the summer after learning that some LPs were either seeking liquidity or wanted to rebalance their exposure between funds. Fund VII was already in the market with a target of $4.5 billion. The private equity firm has so far raised $4.4 billion and set a hard cap of $5 billion, according to sources familiar with the situation. It has also made 12 investments from the vehicle.

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