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TPG Asia Fund Investors Can Cut Commitments: Letter

15 April, 2009

TPG Capital has given investors in its latest Asian fund the option of reducing their commitments by up to 10 percent, or up to $420 million in total, the Texas-based private equity firm said in a letter obtained by Reuters.

The $4.25 billion buyout fund, called “TPG Asia V,” was raised in 2008, according to data from London-based private equity information group Preqin.

Investors in private equity funds — known as limited partners, or LPs — typically make a commitment to a fund and then make the payments over a number of years. But some have been struggling after seeing the value of their equity portfolios slide.

“We … recognize that in the current highly challenging environment the global market declines have placed significant stress on many of our limited partners,” said the letter, addressed to TPG’s LPs.

To reduce pressure on its investors, the letter said TPG was allowing LPs to reduce their capital commitment to the fund by up to 10 percent. It asked investors to reply by March 27, and changes were to take effect April 1.

Investors who wished to continue with their full capital commitments could do so, the letter said, and TPG would waive its management fees on the portion that they could have cut.

“We are making these changes … in order to provide some additional flexibility to all of our investors,” the letter said.

The letter said TPG would not participate in the reduction and would continue with its full $115 million commitment.

“Over the long run, the health and success of our limited partners and ourselves rise and fall together,” the letter said.

It is unclear how much of the fund has already been invested, or which companies it has investments in.

Some of TPG’s investments in Asia have included Nissin Leasing (China) Co Ltd, Shenzhen Development Bank, Australian department store chain Myer Ltd and computer maker Lenovo Group.

TPG also gave investors in its near-$20 billion U.S. buyout fund some breathing room in December.

According to a source at the time, TPG allowed investors to reduce commitments by 10 percent or $2 billion overall as well as reducing annual management fees and pledging it wouldn’t call more than 30 percent of an investor’s total commitment in 2009 unless approved by its advisory committee.


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TPG Asia Fund Investors Can Cut Commitments: Letter

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