FORTUNE — There are a number of reports today about how TPG Capital is considering an IPO, in a move that would see the private equity giant join other publicly-traded firms like The Blackstone Group (BX), The Carlyle Group (CG) and Kohlberg Kravis Roberts & Co. (KKR).
Don’t hold your breath.
At issue here are comments made this morning by TPG co-founder David Bonderman, as part of a keynote speech at the SuperReturn International conference in Berlin. He said: ““At the end of the day, everybody will go public. That will happen in our industry as well. For ourselves, ‘contemplating’ is the right word. We’re thinking about it. But not too hard.”
What’s important to realize is that Bonderman and other TPG executives have been saying the exact same thing for years. In fact, I heard Bonderman’s partner, Jim Coulte, say virtually the exact same thing at this conference two years ago.
More importantly, TPG is currently in a lousy position to go public. The firm’s two most recent flagship private equity funds have struggled mightily, due in part to disastrous deals like Energy Future Holdings and Washington Mutual. According to The Washington State Investment Board, TPG’s fifth fund had an internal rate of return of just 1.18% through the end of last September, compared to an industry benchmark of 7.68%. Its sixth fund had a 9.14% IRR, compared to a 12.32% benchmark.
The situation is so tenuous that TPG recently postponed raising its next flagship private equity fund, instead opting for a $2 billion “bridge fund” from some of its most loyal investors. How (or why) would TPG go public before sorting out the troubles with its core business?
It also is worth stressing that TPG is significantly smaller and less diversified than its listed rivals. Take a look at each firm’s most recently-reported assets under management:
- Blackstone: $266 billion
- Carlyle: $188 billion
- KKR: $94.3 billion
- TPG: $55.7 billion
In other words, TPG manages around 41% less money than KKR and a whopping 79% less than Blackstone. Moreover, TPG doesn’t have a corporate advisory practice, capital markets group, fund-of-funds group, secondaries group, fund placement group or direct real estate practice. Yes, it has a large hedge fund and credit business that diversifies its exposure beyond private equity, but nowhere close to what the aforementioned firms feature
If I were going to place a wager, it would be that no other U.S. private equity firm goes public in the next several years. TPG would probably make the most sense to take the plunge, and that basically makes the entire prospect nonsensical.
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