TPG announced its formal plans to purchase credit and real estate investment specialist Angelo Gordon in a cash and equity transaction valued at about $2.7 billion.
The deal will have TPG plunking down $970 million in cash and 62.5 million in its own stock. In addition, an earnout based on New York-based Angelo Gordon’s future financial performance totals $400 million.
“This strategic transaction meaningfully expands our investing capabilities and broadens our product offering. The addition of Angelo Gordon also underscores our continued focus on growing and scaling through diversification, while driving long-term value for our shareholders,” said TPG CEO Jon Winkelried. “Following more than a year of building relationships between the leadership teams of both organizations, we are confident the combination represents a strong strategic and cultural fit and will create additional opportunities for employees of both firms. We look forward to welcoming the Angelo Gordon team as we execute on our shared vision.”
Combined, the firms will have $208 billion in AUM, which includes Angelo Gordon’s $55 billion credit platform and $18 billion real estate unit. Over the last five years, Angelo Gordon has doubled its AUM and now has 650 employees across 12 offices in the U.S., Europe and Asia.
TPG expands beyond PE
At the close of the transaction, TPG, which is known primarily for its private equity prowess, will have a diversified set of investments strategies including private equity, impact, credit, real estate and market solutions. San Francisco-based TPG recently raised $3.4 billion for an additional tech-oriented PE fund.
For TPG, the deal also marks a significant expansion into credit strategies. Angelo Gordon’s platform offers scaled and diversified capabilities across the credit investing spectrum, including corporate credit and special situations, direct lending, and structured credit. The Angelo Gordon team earlier this year launched its second dislocation fund with over $1 billion in commitments.
The purchase also expands TPG’s geographic reach in Europe and Asia, broadens sourcing capabilities, and adds additional strategies, including a net lease strategy. On a combined basis, TPG will have meaningful scale with $38 billion of collective AUM in real estate across TPG and Angelo Gordon.
Upon closing of the transaction, which is expected in the fourth quarter, Angelo Gordon will become a new significant investing platform within TPG. Angelo Gordon’s Co-CEOs Josh Baumgarten and Adam Schwartz will become Co-Managing Partners of the platform, reporting to TPG CEO Winkelried.
“This is a terrific partnership that provides Angelo Gordon with the scale to capitalize on the growing opportunity set we see in the credit and real estate markets, the diversification to create new solutions for our clients across the risk spectrum in all market conditions, and the opportunity to share our collective expertise, insights, and knowledge,” said Baumgarten, Angelo Gordon Co-CEO and Head of Credit.
Schwartz, co-CEO and head of Real Estate at Angelo Gordon, added, “We are proud to be joining a world-class investment platform that shares our philosophy on firm culture, investment excellence, and delivering for clients. This transaction is a testament to the team and business that we have built over nearly 35 years, and we are excited about the new and expanded opportunities ahead for our employees and LPs.”
Officials added that the deal also creates an even more compelling partner for the largest LPs globally in expanding alternative investment opportunities across a broad range of asset classes and return profiles that offer solutions for high growth channels such as insurance, high net worth, and retail, as well as institutional clients.
“Both firms have grown organically over the past three decades, from private founder-led businesses into seasoned firms with next-generation executive leadership poised to accelerate further growth as part of a diversified platform,” added Jim Coulter, TPG’s co-founder and executive chairman. “There is a clear alignment of interests, values, and culture with a focus on entrepreneurship, innovation, and investment excellence. We look forward to building on our collective momentum together.”