Earnings call transcript: TPG Q3 2025 results miss forecasts, stock falls

TPG Inc. reported its third-quarter 2025 earnings, missing analysts’ expectations with earnings per share (EPS) of $0.53, below the forecasted $0.57. Revenue also fell short at $509.4 billion compared to the expected $540.03 million. The company’s stock reacted negatively, dropping 3.57% in regular trading and falling further by 7.59% in pre-market trading.

Key Takeaways

• TPG’s EPS and revenue missed analyst forecasts, leading to a significant stock decline.
• The company declared a dividend of $0.45 per share.
• Total assets under management (AUM) grew 20% year-over-year.
• TPG launched new investment products and expanded its strategic infrastructure.

Company Performance

TPG Inc. reported a mixed performance for Q3 2025, with significant growth in assets under management and strategic initiatives. The company’s total AUM increased by 20% year-over-year to $286 billion, a testament to its robust investment strategies and market positioning. However, the earnings miss and revenue shortfall overshadowed these achievements, impacting investor sentiment.

Financial Highlights

• Revenue: $509.4 billion, missing the forecast of $540.03 million.
• Earnings per share: $0.53, below the expected $0.57.
• Net income: $67 million.
• Fee-earning AUM: Increased by 15% to $163 billion.
• Quarterly fee-related revenue: $59 million.

Earnings vs. Forecast

TPG’s actual EPS of $0.53 fell short of the forecasted $0.57, resulting in a negative surprise of 7.02%. Revenue also missed expectations by a significant margin, which likely contributed to the stock’s decline. This performance contrasts with previous quarters where the company often met or exceeded expectations.

Market Reaction

Following the earnings announcement, TPG’s stock price dropped by 3.57% during regular trading hours and further decreased by 7.59% in pre-market trading. The stock’s current price of $50.65 is well below its 52-week high of $72.98, indicating a challenging period for the company as it navigates market volatility and investor concerns.

Outlook & Guidance

Looking ahead, TPG expects robust fundraising in 2026, similar to 2025 levels. The company plans to launch new credit strategies and expand its private wealth distribution channels. TPG aims for a mid-40s fee-related earnings margin by year-end, reflecting its focus on operational efficiency and strategic growth.

Executive Commentary

CEO John Winklevide emphasized TPG’s market share gains due to strong returns, stating, "We believe TPG is gaining share due to consistently strong returns." He also highlighted the role of AI in the company’s operations: "AI is part of everything we’re doing now." CFO Jack Weingart noted expectations for continued margin expansion, saying, "We expect continued FRE margin expansion in the next couple of years."

Risks and Challenges

• Market volatility and economic uncertainty could impact fundraising efforts.
• Increasing competition in private equity and credit markets.
• Potential regulatory changes affecting investment strategies.
• Dependency on AI and technology advancements for competitive advantage.

Q&A

During the earnings call, analysts inquired about TPG’s monetization strategies and the impact of AI on its investment portfolio. Executives discussed growth opportunities within the credit platform and potential mergers and acquisitions to drive inorganic growth.

Full transcript - TPG Inc (TPG) Q3 2025:

Operator: Good morning, and welcome to the TPG’s Third Quarter twenty twenty five Earnings Conference Call. Currently, all callers have been placed in a listen only mode. And following management’s prepared remarks, the call will be open for your questions. Please be advised that today’s call is being recorded. Please go to TPG’s IR website to obtain the earnings materials.

I will now turn the call over to Gary Stein, Head of Investor Relations at TPG. Thank you. You may begin.

Gary Stein, Head of Investor Relations, TPG: Great. Thanks, operator, and welcome, everyone. Joining me this morning are John Winklevide, Chief Executive Officer and Jack Weingart, Chief Financial Officer. Our President, Todd Ciszewski, is also here and will be available for the Q and A portion of this morning’s call. I’d like to remind you this call may include forward looking statements that do not guarantee future events or performance.

Please refer to earnings release and SEC filings for factors that could cause actual results to differ materially from these statements. TPG undertakes no obligation to revise or update any forward looking statements, except as required by law. Within our discussion and earnings release, we’re presenting GAAP and non GAAP measures, and we believe certain non GAAP measures that we discuss on this call are relevant in assessing the financial performance of the business. These non GAAP measures are reconciled to the nearest GAAP figures in TPG’s earnings release, which is available on our website. Please note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase and interest in any TPG fund.

Looking briefly at our results for the third quarter, we reported GAAP net income attributable to TPG Inc. Of $67,000,000 and after tax attributable earnings of $214,000,000 or $0.53

Unidentified Speaker: per share

Gary Stein, Head of Investor Relations, TPG: of Class A common stock. We declared a dividend of $0.45 per share of Class A common stock, which will be paid on 12/01/2025, to holders of record as of 11/14/2025. I’ll now turn the call over to John.

John Winklevide, Chief Executive Officer, TPG: Good morning, everyone. Thank you for joining us today. TPG delivered strong results in the third quarter. Our total AUM grew 20% and quarterly fee related earnings grew 18% year over year. The flywheels across our business continued to accelerate, led by robust capital formation across all asset classes and a record quarter for deployment.

I’ll spend a moment on each of these important areas. This was an outstanding fundraising quarter. We raised a near record $18,000,000,000 of capital, up 60% from the second quarter and 75% year over year. This was driven by a successful first close in our flagship private equity funds and strong credit fundraising, where we continue to experience a step function increase in capital formation. We’ve made substantial progress against our previous guidance of raising significantly more capital in 2025 compared to 2024.

Year to date, we’ve raised over $35,000,000,000 of capital, which already exceeds our full year 2024 fundraising. In private equity, we raised $12,300,000,000 in aggregate across our strategies. This was primarily driven by $10,100,000,000 raised in the first close for our flagship buyout funds, TPG Capital ten and Healthcare Partners III, including commitments that are signed but not yet closed. We received strong support from our existing clients who increased their commitments by 12% on average over the prior vintage. These results reinforce our confidence that TPG is positively differentiated within the private equity market where fundraising has been perceived as challenging in the current environment.

Our clients continue to lean in and look for more ways to partner with us in private equity given our distinct and highly disciplined approach and consistently strong performance. As a result, we believe we are outperforming in private equity fundraising relative to the broader market and gaining share. In credit, after reaching an inflection point last quarter, we maintained our strong fundraising pace and closed $4,800,000,000 of credit capital in the third quarter. In middle market direct lending, we announced the closing of a $3,000,000,000 continuation vehicle, which we believe is the largest ever private credit CV. This unique transaction enabled us to extend the duration of our capital base for a portfolio of high performing senior loans in collaboration with several strategic partners.

In structured credit, we raised $1,400,000,000 across the strategy and launched our new liquid securities focused open ended fund. And in credit solutions, we continued fundraising for our third flagship fund, bringing the total capital raised to date to $4,300,000,000 We expect to hold a final close in the fourth quarter and for the fund to be meaningfully larger than its predecessor. Year to date, we’ve raised nearly $12,000,000,000 of credit capital in what has been a breakout year for our franchise. As a result of our fundraising momentum, we ended the quarter with record credit dry powder of over $16,000,000,000 Credit AUM not earning fees stood at nearly $11,000,000,000 which represents over $100,000,000 of annual revenue opportunity that we expect to flow into management fees over time. In real estate, we held the final close for our inaugural real estate credit strategy, bringing total commitments across the main fund and related vehicles to to $2,100,000,000 which exceeds our initial $1,500,000,000 target by more than 35%.

We raised approximately $1,000,000,000 of capital in the final close, driven by the strength of Treco’s initial portfolio. Treco adds to our long track record of expanding into adjacent strategies through organic innovation. Early in the current cycle, we identified a compelling opportunity to invest in real estate credit at attractive risk adjusted returns given the significant contraction in valuations and available leverage. We’re seeing our thesis prove out with the fund outperforming its initial return projections and generating double digit cash on cash yields. Treco is an important extension of our investment capabilities in both real estate and credit, and we expect to scale the strategy over time.

Additionally, our fundraising success has been amplification into the fastest growing distribution channels, including insurance and private wealth. First, we’ve grown our capital from insurance clients by more than 60% over the last two years. Insurance represented 40% of Trepo’s final close and over 25% of the capital raised for our credit platform in the third quarter. We’re continuing to create innovative access points and cross platform solutions for our insurance clients. For example, we’ve closed more than $600,000,000 of insurance capital in our first rated note feeder for Credit Solutions, which we believe is one of the few rated access points for this type of strategy in the market.

Second, we’re making strong progress in the private wealth channel, where we raised over $1,000,000,000 of capital across our drawdown and evergreen funds in the third quarter. TPOP, our perpetually offered private equity product continues to gain momentum with approximately $900,000,000 of inflows since its launch five months ago, including $250,000,000 in October. This accelerated pace was supported by the launch of TPOC on a leading international private bank platform in September. We’re experiencing strong traction in Europe and Asia and plan to launch on several additional domestic and international platforms over the next few quarters. Private wealth is an important growth driver for us and we remain focused on further expanding access to our products across geographies and investor types, which Jack will touch on further.

Moving on to deployment. As discussed on our last call, we expected our investment pace to accelerate into the back half of the year. In the third quarter, we deployed a record $15,000,000,000 up over 70% year over year, and our activity was well diversified across the firm. Our credit platform drove over half of the capital deployed during the quarter with $8,300,000,000 invested across our strategies more than doubling year over year. In structured credit, we deployed $3,600,000,000 of capital, half of which was driven by residential whole loan investments we continue to be a market leader.

In asset backed finance, we closed notable transactions across several of our verticals, including non bank credit card origination. We also completed a meaningful upsize of our joint venture with Funding Circle and Barclays in The UK. In middle market direct lending, Twinbrook generated $2,000,000,000 of gross originations in the third quarter, our highest volume so far this year. Importantly, given the steady increase in overall M and A activity, 70% of our origination was driven by new investments, bringing the total number of companies in our portfolio to over 300. Our pipeline remains robust and we expect the fourth quarter to be our most active quarter of the year.

In Credit Solutions, as spreads remain at historic heights, our flexible mandate continues to create opportunities to provide tailored solutions in the private market. As an example, last year, we formed a proprietary joint venture with Bluestar Alliance and Hillco Global to finance and acquire consumer brands and intellectual property. Our unique partnership brings together significant sector, operating and financing expertise and equally differentiated access to attractive opportunities. This was most recently highlighted by the JV’s announced acquisition of the iconic Dickies apparel brand in September. Despite some recent concerns in the broader credit markets, including certain allegations of fraudulent activity, our portfolios continue to perform well.

We’ve maintained a disciplined and highly selective approach to credit underwriting with a focus on fundamentals and risk management. As a result, our annualized loss ratio since inception has remained stable at only two basis points for Twinbrook, three basis points for our private asset backed credit business and less than 40 basis points for Credit Solutions. We continue to uphold these same rigorous standards as we evaluate new investment opportunities, and Jack will share more details in his remarks. Across our private equity strategies, we maintained a healthy pace of deployment with $4,600,000,000 of capital invested in the third quarter, up nearly 40% year over year. At GBG Capital, we announced the carve out of Prophecy, GE Vernova’s manufacturing software business.

This transaction is a culmination of the relationship we’ve built with GE Vernova over seven years across both our capital and climate strategies. Prophecy aligns well with our expertise in corporate carve outs and structured partnerships, which comprise 11 of the 16 most recent investments in TPG Capital. Additionally, just a few weeks ago, we announced to take private of Hologic, a leading provider of diagnostic, imaging and surgical products focused on women’s health for up to $18,000,000,000 We’re excited to partner with one of the premier scale platforms in the women’s health space, which has long been a thematic area of focus for us. In tech adjacencies, we closed minority investments into several leading large language model developers, expanding our exposure to Gen AI development and providing us with differentiated insights into this rapidly evolving area of the technology ecosystem. These investments follow the innovative debt financing that our Credit Solutions business recently anchored for xAI.

We continue to evaluate opportunities to capitalize on the robust growth in this space and to partner with leading AI companies across each of our asset classes. In a Rise Climate, yesterday, we announced the acquisition of Kinetic, a leading international operator of zero emission transport and infrastructure based in Australia. Kinetic aligns closely with our deep expertise in clean electrification and mobility and represents the second investment by our transition infrastructure strategy. In real estate, we had our most active deployment quarter so far this year with $1,900,000,000 invested across TPG and TPG AG real estate. During the third quarter, Trepp completed the acquisition of the former Broadcom office campus in Palo Alto’s Stanford Research Park.

This investment is consistent with TREP’s continued focus on selectively investing in office markets where we see compelling green shoots emerging such as the San Francisco Bay Area. We believe the Bay Area is reaching an inflection point in demand driven by the growth in AI focused tenants. In PPG AG real estate, we’ve maintained an active investment pace with nearly $2,000,000,000 deployed year to date across our dedicated regional funds. We’re identifying and capitalizing on improving supply demand dynamics in certain sectors, including senior housing and hospitality in The U. S.

And office markets in Japan, Korea and London, which have low vacancy rates and attractive rental growth. Before I wrap up, I want to share what I’m hearing from my conversations with our clients across the world and how it’s shaping our business and the opportunities in front of us. In private equity, institutional clients continue to face liquidity constraints and are consolidating their relationships among fewer GPs. Against this backdrop, we believe TPG is gaining share due to consistently strong returns we’ve delivered. This has been driven by our focus on investing in deeply thematic areas and partnering with our portfolio companies to drive growth.

Over the past decade, across our TPG Capital and TPG Growth Funds, more than 80% of our value creation has come from earnings growth compared to less than half for the S and P five hundred, where over 40% of the value was driven by multiple expansion. This differentiation is resonating with our clients and driving continued fund over fund growth across our private equity strategies. Additionally, we continue to see increasing allocations into private credit. Investors are diversifying their exposure into areas such as structured credit, lower middle market direct lending and middle of the capital structure opportunities where we’ve built scaled investment strategies. Our clients are expanding their relationships with us across our credit platform, including through multi fund partnerships and seeding new strategies.

As a result, our credit AUM has grown 23% year over year, and it continues to be one of the fastest growing areas within our firm. And finally, in real estate, we are well positioned to play offense with over $12,000,000,000 of combined dry powder and continued positive value creation across our portfolios. Over the past two years, we’ve capitalized on the substantial market dislocation to acquire high quality assets that are not typically available for sale. We believe the real estate market has stabilized and transaction activity is accelerating. Our clients are expressing a growing interest in real estate as demonstrated by the success of Treco’s recent fundraise.

Given the strength of our distinctive portfolios, we remain confident as we prepare to launch fundraising campaigns for several of our real estate strategies in the coming quarters. We made significant progress against our strategic priorities for 2025, and I’m pleased with the strength of our business across Our increased scale and diversification positions us well to deliver accelerated growth and generate long term value for our shareholders. I’ll now turn the call over to Jack to discuss our financial results. Thanks, John, and thank you all for joining us today. As you can see from our strong third quarter results, we’ve been successfully executing on our growth strategy.

On our last call, I discussed several key building blocks we’ve been putting in place to drive our next leg of growth. These include scaling our credit platform, launching our next series of private equity and real estate funds and building on new products and businesses. Our Q3 results demonstrate that we’re tracking we’re Our capital formation and credit is on pace for a record year in 2025 and credit deployment through the third quarter of nearly $17,000,000,000 already exceeds our full year 2024 total. Fundraising for TPG Capital X and Healthcare Partners III is off to a great start and with more than $10,000,000,000 raised in the first close. And we continue to expand through organic innovation.

As John mentioned, we raised $2,100,000,000 of capital for Trico, our opportunistic real estate credit fund including related vehicles and approximately 900,000,000 to date for TPOP, our new perpetual private equity product, which I’ll expand on later. Additionally, earlier this year, we launched fundraising for our second GP led secondaries fund, which is tracking to be significantly larger than its predecessor. We ended the third quarter with two eighty six billion dollars of total assets under management, up 20% year over year. This was driven by $44,000,000,000 of capital raised and $24,000,000,000 of value creation, partly offset by $26,000,000,000 of realizations over the last twelve months. Fee earning AUM increased 15% year over year to $163,000,000,000 These figures include TPG PepperTree, which closed on July 1 and added $8,000,000,000 of AUM and $4,500,000,000 of fee paying AUM.

As a result of our strong fundraising in recent quarters, our dry powder has grown to a record $73,000,000,000 This represents a real strategic asset at a time when as John indicated, our teams are sourcing very interesting investment opportunities. AUM subject to fee earning growth was $35,000,000,000 at the end of the quarter, which included $24,000,000,000 of AUM not yet earning fees. This represents a revenue opportunity of more than $220,000,000 on an annualized basis. Our management fees grew to $461,000,000 in the third quarter, driven by the activation of TPG Capital ten and the addition of TPG PepperTree to our market solutions platform. We generated $38,000,000 of transaction and monitoring fees in quarter and $163,000,000 over the last twelve months.

We continue to invest in building our capital markets franchise. And as we look to the fourth quarter and into 2026, we expect to drive further growth in transaction fees. We reported quarterly fee related revenue of $5.00 $9,000,000 fee related earnings of $225,000,000 margin, which tracks well against our previous guidance of exiting the year with a margin in the mid-40s. Our distributable earnings for the third quarter were $230,000,000 which included $30,000,000 of realized performance allocations, driven by our full exit from Sai Life Sciences, which has traded up nearly 70% since its IPO in the India Stock Exchange last December and the full sale of Samhwa, a leading cosmetics packaging company in Korea. This marks a strong first exit in TPG Asia VIII less than two years after our additional investment in the company and is a great outcome for our Asia franchise.

I’d like to take a moment to explain the relationship between our monetization activity and our generation of performance related earnings for shareholders. During the quarter, we continued to drive strong realizations across our portfolio, which increased nearly 40% year over year to $8,000,000,000 The reason that PRE did not increase commensurately relates to the timing of profit allocations early in a fund’s life. In addition to SciLife Sciences and Samoa realizations during the quarter included early exits in several other funds such as our highly successful sale of Elite in TPG Capital IX. These exits drove attractive profits in DPI for our fund investors, but did not result in significant performance allocations as the gains went to repay fees and expenses, which is typical for the first exits in a fund. Looking forward, this sets us up for increased performance allocations for the next series of exits in these young funds.

Basis, we’ve generated $262,000,000 of performance related earnings for shareholders, which is a 140% increase compared to the prior twelve month period. Our clients recognize the differentiated DPI we’ve delivered and we’ve continued to drive monetization monetization activity since quarter end. In October, we completed our first major liquidity event in our GP led secondaries business TGS through a partial realization of CR Fitness, a leading Crunch Fitness franchisee at an attractive valuation. Since our initial investment, our sponsor partner North Castle and the management team have driven exceptional growth at the company more than doubling both the number of active clubs and EBITDA. And just last night, our Rise and Rise Climate portfolio company Beta Technologies, which has developed electric aircraft capable of vertical takeoff successfully priced $1,000,000,000 all primary IPO.

This IPO was very well received allowing the company to upsize the offering and price above the filing range. Moving on to our balance sheet, we drew on our revolver during the quarter for several growth initiatives, including funding the cash consideration for PepperTree and seeding the portfolios for new businesses such as TPOP. We issued $500,000,000 of senior notes during the quarter and used the proceeds to pay down our revolver. As a result, our net interest expense increased to $23,000,000 in the third quarter. As of September 30, we had $1,700,000,000 of net debt and $1,800,000,000 of available liquidity, giving us ample flexibility to continue pursuing new growth initiatives.

Given our increased diversification and strong financial profile, during the quarter we did receive an upgrade in our credit rating from Fitch to A-. The fundamentals across our portfolios remain strong and we delivered positive value creation in each of our platforms for the third quarter and over the last twelve months. As John mentioned, recently there’s been heightened focus in the market on credit quality due to a few high profile defaults. Importantly, we have no exposure to those events and the underlying health of our credit portfolios remain strong. In aggregate, our credit platform appreciated 3% in the third quarter and 12% over the last twelve months.

In middle market direct lending, our portfolio comprises exclusively first lien loans with maintenance financial covenants and we are a lead lender in nearly all of our transactions. We’ve built in significant downside protection and take an active approach to portfolio management. As a result, our portfolio of more than 300 companies continues to perform well. Non accruals remain extremely limited at less than 2% and our average interest coverage ratio has remained very stable at approximately two times. In structured credit, our asset based credit funds net IRR since inception remained above its target range at 13.5% at the end of the third quarter.

In addition, our flagship structured credit fund MVP continued to outperform credit benchmarks and returned 3% in the third quarter. Recent stress in the structured credit market has been evident in the subprime auto space. Several years ago, we identified weakening fundamentals in auto finance and our structured credit funds proactively rotated out of the sector. As a result, we currently have zero exposure. Looking at Credit Solutions, our funds generated net returns ranging from approximately 5% to 6% in the quarter, which far outpaced The U.

S. Leverage loan and high yield bond indices. In addition, our second essential housing fund generated a net return of nearly 4% during the quarter and more than 11% year to date. Turning to private equity, our portfolio in aggregate appreciated 3% in the quarter and 11% over the last twelve months. Overall, the companies within our capital, growth and impact platforms continue to meaningfully outperform the broader market with revenue and EBITDA growth of approximately 1720% respectively over the last twelve months.

TPG’s real estate portfolio appreciated 3.5% in the quarter and nearly 16% over the last twelve months. We continue to see strong performance and value creation in our data center, residential and industrial investments. PPG AG’s real estate portfolio appreciated by 2% in the third quarter and 3.5% over the last twelve months. Our net accrued performance balance grew by nearly $200,000,000 in the quarter to reach 1,200,000,000 driven by our strong value creation in addition to $100,000,000 of accrued carry acquired through Peppertree. Turning to fundraising, we raised more than $18,000,000,000 during the third quarter, including more than $12,000,000,000 in private equity and nearly $5,000,000,000 in credit.

Year to date through the third quarter, we’ve raised more than $35,000,000,000 across platforms, which already exceeds the $30,000,000,000 we raised in 2024. As John noted, private wealth is a strategic priority and an important growth driver for TPG. I’d like to share some additional detail on our progress in increasing our penetration within this channel. During the third quarter, we raised over $1,000,000,000 of capital in the wealth channel and approximately half of these inflows came from our evergreen solutions, which continue to gain momentum as we widen our distribution partnerships globally. TCAP, our non traded BDC raised $235,000,000 in the quarter and continues to grow reaching over $4,000,000,000 of AUM at the September.

TCAP is actively distributed by three of the largest U. S. Wirehouses we recently launched on one of the largest independent broker dealer platforms. Twinbrook’s focus on the lower middle market, conservative lending standards and high credit quality is continuing to differentiate TCAP relative to other credit options available to wealth clients. We’re actively expanding TCAP’s distribution network and expect inflows to continue to accelerate.

TPOP, our perpetually offered private equity vehicle has been very well received in the channel, exceeding our high expectations. TPOXX has raised approximately $900,000,000 in its first five months and we’re experiencing increasing momentum as we grow our distribution footprint and investment portfolio. From its activation date in June through September 30, CPOP has delivered net returns of approximately 12% and as of quarter end provided exposure to 41 individual TPG portfolio companies. We’re very focused on expanding our distribution for this strategy globally in 2026. Finally, we continue to expand our partnerships with global banks and wealth platforms adding more than 20 new relationships in the third quarter.

Additionally, we’re actively structuring several innovative partnerships to extend our brand and increase the accessibility of our products for the wealth community, including in the RIA channel. We look forward to providing updates here in the coming quarters. Before I wrap up, I’d like to provide an update on our fundraising outlook. During the course of this year, as we anticipated, we’ve been experiencing a step function increase in the pace of our capital formation with a particularly robust third quarter driven by the strong first close for our TG Capital and Healthcare Partners funds. Most of the remaining capital for these funds will be raised next year.

Nonetheless, we still expect the fourth quarter to be an active period for fundraising across asset classes. Looking at 2026, we expect to have another robust year of fundraising similar to this year, driven by a number of ongoing and new campaigns. In credit, we expect continued capital raising across all of our existing businesses. In addition, we’re working on launching several new strategies to further expand our credit platform. In private equity, we’ll continue to be in the market with our capital and climate campaigns.

We expect to launch fundraising for the next vintage of our flagship Asia fund as well as our fourth RISE fund. On the real estate side, we expect 2026 to be an important and significant year for our franchise. We’ll begin fundraising for the next vintage of TPG Real Estate’s flagship fund and TPG AG Real Estate’s funds in both The U. S. And Asia.

We also remain highly focused on diversifying our sources of capital and further penetrating the fastest growing distribution channels. In private wealth, we expect to grow our distribution network in The U. S. And internationally and launch additional semi liquid and yield oriented products across asset classes. Additionally, we continue to organically expand our insurance relationships and evaluate broader strategic partnerships and inorganic opportunities.

Based on the increased cadence and consistency of our capital formation efforts over the last few years, we’ve clearly been successful in expanding and diversifying our business. We’re excited to continue building on this momentum and delivering differentiated results for our clients and shareholders. Now, I’ll turn the call back to Madison to take your questions.

Operator: Thank you. And we’ll take our first question from Glenn Schorr with Evercore.

Unidentified Speaker: Thank you. So appreciate the color you gave us on the relationship between monetizations and PRE and some monetizations early in funds left. What’s interesting is 69% of your net accrued performance is now in funds at five years or older. So I’m just curious, really good monetization backdrop according to the banks, brokers, you guys. So just how does that inform us about the realization pipeline that you’re looking at given the age timing and all the other comments?

John Winklevide, Chief Executive Officer, TPG: Yes. Good question, Glenn. Let me start with just by explaining that vintage page a little bit, because I don’t think we’ve done that in the past and then Todd will expand a bit more on our outlook for PRE. But on that vintage chart, when we say vintage, the category vintages before 2020 and earlier that refers to the vintage of the fund itself not to the underlying portfolio companies. So the biggest category there for example is TPG-eight, which is twenty nineteen vintage fund.

So those investments were made largely in 2020, 2021, 2022 before we raised TPG-nine. And then Growth five, the twenty twenty vintage fund, that’s another big category in that kind of aged vintage bucket. And that’s the twenty twenty vintage fund where most of those deals were done in 2021, 2022, 2023. So despite 2020 sounding like an earlier vintage, the vintage of the underlying investments are actually still pretty young. So that being said, that’s what that page means and Todd will expand more on our approach

Unidentified Speaker: to monetization. Yes. I think just to echo what Jack said, these are a lot of newer deals. We are folks who drive growth in those investments. It takes sometimes a couple of years, but we feel like we’re at the appropriate cycle in terms of the liquidity in those funds.

And I’d say that without repeating much of what Jack said, I do feel like DPI and liquidity has been a real differentiator for us. We approach it with a lot of intentionality. I think we bring the same level of focus and intensity that we do the investment decisions, which I think has been a differentiator for us, which is part of the reason we were net sellers in capital and growth in 2020, 2021, 2022. We were net buyers in 2023 when market pullback and then net sales in 2024. As I look forward, I feel like we are constructive on the liquidity prospects and feel like we have at present, we have a number of assets we’re exploring liquidity around.

John mentioned actually the majority of TPG Capital’s investments in this last fund have been carved out

John Winklevide, Chief Executive Officer, TPG: some structural relationships. In many of

Unidentified Speaker: those structural relationships, we actually know who the buyer of business will be. In many of those cases, we have put call relationships, which I think is another interesting feature and pretty unusual set of opportunities. The majority of the deals and capital over the last many years have been sold to strategic. The strategic, I think, are perking up and interactive. We’ve also mentioned some IPO recent IPO as in yesterday.

We’ve had more than 13 IPOs in India in the past few years. So we’re taking advantage of those market opportunities as well. But overall, we feel good about the momentum in the portfolio. We feel good about the dialogues we’re having and we’re constructive on the liquidity environment.

John Winklevide, Chief Executive Officer, TPG: Glenn, my comments on the call were meant to basically indicate that we are still aggressive on the monetization The timing issue I described is how that flows through the PRE. If the sales were made in more mature funds that already had exits pay down the fees and expenses, which is the normal way a waterfall works, the PRE during the quarter would have been probably twice the $30,000,000 Right.

Unidentified Speaker: And so now essentially we’ve cleared the decks. The exits out of those funds should flow through the PRE. Very helpful color. Thanks. Thank

Operator: you. And our next question comes from Craig Siegenthaler with Bank of America.

Craig Siegenthaler, Analyst, Bank of America: Good morning, John, Jack. Hope everyone is doing well. We also have a question on realizations, but aggregate realizations not puree. For the first time since you IPO’d almost four years ago, it is once again reigning IPO and M and A announcements. If this continues, can you help us frame the level of realization potential out of your P and Growth Capital businesses over the next year?

And the reason I’m asking TPG this is the last time we had this backdrop in 2021, TPG was arguably the most active in the industry at monetizing. And it sounds like your commentary today is constructive, but maybe not super bullish.

John Winklevide, Chief Executive Officer, TPG: Maybe I’ll start on that, Craig. It’s Jack. The way I think about that, as you know, we don’t forecast realizations and PRE for a good reason. Like we’re going to sell companies when it’s the right time to sell companies and we have all the complicated waterfall mechanics that I just talked about. That being said, the way I think about it from the top down is our accrued unrealized performance allocation balance is now up to $1,200,000,000 right?

We acquired some CRE from a crude CRE from Peppertree that was half of that increase, the other half was. So we’re seeing that balance start to grow again. And as you and I have talked about, one way to frame it is through a cycle, you would expect that we would monetize that balance over call it a three or four year time period. And the more attractive the market gets, the more we’ll tend to lean into that. But the most important question is what are the underlying companies that we achieved our value creation plan And is it the right thing to do for our funds, our investors to sell that business?

And that will be our framework for thinking about each exit through the course of the year next year. Craig, it’s John. I think your interpretation of it is slightly off. I think that what when we were talking about this, I think what we were trying to communicate is this intentionality around what we do and how we do it. And when you look at how we built our portfolios across Capital VIII, Capital IX and now into Capital X, again, as Todd just mentioned, the dynamics of the strategic partnerships that we have in a number of cases actually having strategics work alongside of us to know essentially because they want an opportunity to acquire an asset.

I think that what we’ve done is try to set up our portfolios in a way where we have multiple pathways in terms of exit opportunities. If you look at the size of our companies, the size of our businesses, one of the things that we focus on obviously is creating value, which I mentioned in my comments in terms of revenue growth, EBITDA growth and also trying to be intentional about where in the life cycle of that value creation we actually start to think about selling or monetizing assets so that there is more in the tank as we think about who’s ultimately going to buy the asset. And I think that if you look at our portfolios, think we’re actually overlaying that by the way is sort of a perspective on where valuations are. You made the point about 2021, 2022. We leaned in obviously, we sold our entire software portfolio back then because of the way we perceive valuations in the market that turned out to be a very good decision.

I would say that the intent what we meant what we’re meaning to communicate is that we’re as focused on how we think about making decisions around the buy in our portfolio as we are on the sell. And I would say that you should expect us to be active as it relates to how we think about monetizing our portfolios. And so I just wanted to clarify because I think your interpretation is a little bit off.

Unidentified Speaker: Just the last thing I would add, and both John and Jack have referenced it. One of the reasons I think we’re constructive on the exits is just the strength of the portfolio performance. We have a portfolio on an LTM basis across private equity that’s growing EBITDA at 20% plus and none of the platforms on an LTM basis are below 15%. They’re all really performing well. And that is, of course, when you’re dealing with these strategic exits, but also IPOs, that’s the best leading indicator.

Operator: Thank you. And we’ll take our next question from Ken Worthington with JPMorgan.

John Winklevide, Chief Executive Officer, TPG: Hi, good morning. Thanks for taking the question. We’re seeing far more concern about AI disrupting certain parts of the software technology and business services area. So two parts here. One, as you think about your investment portfolio, do you see any risks in the investment as that theme plays out?

And then maybe, hopefully, interesting, how do you feel about being on the winning side of this technological shift, either through PepperTree or elsewhere in your various business verticals? Sure.

Unidentified Speaker: Thanks for the question, Ken. We’ve been very early investors in AI. We started over a decade ago with C3AI and had a number of the early predecessors to today’s company as well as a number of the companies that are in the headlines today. And actually funding limited to the equity side, credit solutions actually led what I think is the first substantial debt investment in AI leading a raise for XAI last quarter. It helps that we’re based in San Francisco.

It’s a good arm. You can probably hit more than half of the AI companies from our building. And we’ve invested significantly in AI capabilities. So we have an AI center of excellence in which our operations and business building team drives AI adoption among each of the portfolio companies. We have a lot of investments recently in AI specific human capital, the former Chief Technology Officer at Accenture, one of the co heads of McKinsey software business.

So AI is really part of everything we’re doing now. It’s moving quickly. It’s part of every underwriting decision. Technology in general, software in particular, are certainly in our power allies. I think you were specifically focus on the impact of AI there.

Our software portfolio is growing earnings at 22%, 23%. And I do think AI is having a meaningful impact, but that is having a meaningful impact in both directions. There’s some real opportunities and net beneficiaries from AI. So for us, we’ve been spending time in areas like vertical market software, FinTech, cybersecurity. We’ve seen that number of our recent investments.

We’ve probably been a little more cautious on some of the broader horizontal scenes in infrastructure software where we see AI changing the landscape, very quickly. And again, every single underwriting decision, not just in software, but particularly in software, has a high intensity focus on the impact of AI. Even in companies like, you know, health care IT, just to use one example, one of our largest investments in the last few years is a business called Lyric, which we bought out of UnitedHealthcare. It looks at 60 plus percent of the primary claims in The U. S.

Health care insurance industry. And so you would think as an algorithm based business, you would have a big impact from AI. But for years and years, we were the only ones on an aggregated basis that have a proprietary look at all that data. So AI really isn’t a threat. Instead, it’s an opportunity for that business to expand its footprint beyond the primary claims editing space.

So, it’s really a very company by company analysis. And in the companies that I think we’ve been into, we really feel like it’s an opportunity. To your point, AI has a huge impact on healthcare. It has a huge impact outside of equity on the credit side as well. And we feel like we have assembled the right team and the right internal rigor to make sure that we’re thinking quite dynamically and in an intentional way about how to make sure that we’re on the right side of AI and then leveraging AI to drive performance in our portfolio companies.

Great. Thank you.

Operator: Thank you. And we will take our next question from Alex Blostein with Goldman Sachs. Please go ahead.

John Winklevide, Chief Executive Officer, TPG: Hey, good morning. Thank you for the question. I wanted to spend a minute on credit. It feels like momentum in that business is finally starting to take off. We saw it with fundraising for the last couple of quarters, but it looks like deployment is also starting to catch up.

So maybe spend a minute on how you see the growth evolving from here, where the incremental benefits and fundraising are coming from? And I think one of the items you highlighted also launch of new products as it comes when it comes to credit into 2026, and I was hoping you could expand on that as well. Thanks. Yes, sure. Thanks, Alex.

This is Sean. Look, think, as we said in our comments, this has been the underlying thesis of when we acquired the Angelo Gordon business was that it was a platform that had a multi strategy approach in terms of across lending structured credit solutions, total return opportunities. And that inside of this firm, essentially step to the next level, both from the perspective of capital formation, but importantly, in terms of the overall ecosystem to originate transactions. And I would say that it’s hitting on every cylinder in terms of the ability to scale the businesses. If you recall, one of the things that we said early on in the acquisition was that businesses were out originating the capital base essentially being undercapitalized, and that’s fundamentally changing now.

You can see it in the scale of our capital formation across all of those businesses. You can see it in the uptick in relevance of our open ended vehicles as well like TCAP that Jack talked about in terms of the acceleration. If you look at the inflows, for instance, at the TCAP, our inflows are the slope of the line is steepening in terms of product in the market. Same thing is happening in MVP in our structured credit business. What we’ve done is we have begun now also to really think about sort of the next level with respect to the various cost of capital of various investment strategies, particularly to serve our insurance company clients, I mentioned in my comments the substantial increase in engagement with insurance clients that is continuing, continued in this past quarter, it’s continuing again.

And really structuring various types of vehicles for our insurance company clients, whether they’re funds of one or SMAs and moving now into things like IG risk in terms of being able to serve the insurance client across a range of assets and across a range of returns, which is obviously what is necessary in order to serve that market. We continue to have one of the things that we’re observing in that part of the market is that I think there is an increasing awareness on the part of most of the life and annuity players in the market, but it’s also getting broader than that, that not being not having partnerships in the alternative side of the business is very dangerous from a strategic competitive position. So as a result of that, because we don’t own a captive at this time, we continue to see that dialogue increasing with respect to various forms of partnerships with a variety of different insurance clients both here as well as internationally. And so I think that that’s going to be I believe that what will happen over the course of the next number of quarters over the course of the next year or so is we’re going to continue to see sort of step function increases in the engagement that we have in that market.

Likewise, I think we’re working on expanding our capabilities with respect to the kind of retail wealth markets. And one of the things that we’ve been focused on is how do we access that part of the market more effectively, more efficiently in much bigger size. And Jack alluded to this in his comments, but I think that hopefully we’ll have some things to talk about over the next couple of quarters where we’ve had some meaningful progress. And that’s really all we can say about it at this time. But we’re very focused on the ability to deliver return streams that in many cases are a combination of liquid and illiquid or liquid and alternative products.

And so we’re putting ourselves in a position and growing our capabilities to be able to deliver that. Lastly, I would say that other areas of growth for us there, we’ve talked about this before, and I think that you’ll recognize this, but we have a best in class lower middle market lending franchise in Twinbrook. And one of the things that we have identified as a result of the sourcing capability that we have in both Twinbrook as it relates to our relationship as well as from Credit Solutions where we’re seeing larger kind of transactions. And sourcing in some cases even that’s coming through relationships we have with sponsors from our private equity business. We are building into the next level of lending.

We like to call it sort of graduating companies. It’s a little bit broader than that, but we like to call it graduating companies where we have companies over 300 portfolio companies at Twinbrook. They start life as companies that are generating $25,000,000 of cash flow and And then they end up life at 40,000,050 million 60,000,000 70,000,080 million dollars of cash flow. And we’ve been the lender to those companies for three, four, five years. We know those companies better than anyone.

And so the risk dynamics of us extending into that part of the market is something that we have a reason to win. And so we are and we’ll have more to say on this again also over the next quarter or two where we’ll formalize this, but we are building into the next leg of growth in that. And we’re already seeding a portfolio and we already have some traction with respect to some LP partners of ours that will anchor the strategy for us. But it’s just a little bit too early to kind of roll it out, but we will be rolling it out over the next couple of quarters. So hopefully that gives you a sense for sort of what the growth drivers are.

I think Alex, when cut through all that, we’re basically early in a multiyear period of growth in fee earning AUM in credit, right. As you alluded to fact that we’re starting to see deployment pickup and fee earning AUM pickup. While that’s been happening, our dry powder in credit over the past year has also increased by 35% or more percent. And as John said, we have multiple channels for additional fundraising and AUM growth that will flow into FAUM. So we expect the next several years to be attractive growth years for our credit business.

Yes, very clear. Great. Thanks guys. And we can move next to Steven Shepper with Wolfe Research. Hear you now.

Go ahead.

Unidentified Speaker: Go Yes, go

John Winklevide, Chief Executive Officer, TPG: I wanted to ask on FRE margin leverage. It came in above expectations in 3Q, 69% incremental margin, certainly a market improvement versus the 51% in 2Q. So while you reaffirm the mid-40s FRE margin exiting the year, thinking about this longer term, just given prior comments supporting meaningful upside to FRE margins as the business scales, whether that higher mid-60s incremental margin is in fact a sustainable run rate, even with all the investments you had spoken of? And how it informs your outlook for the FRE margin trajectory next year and beyond? Yes, good question.

We are reiterating our guidance to exit this year in the mid-40s. As I’ve said all along that is not an endpoint for us. I think you’re exactly right to be looking at the incremental margins in connection with growth in FRR. And we do see that to be well above the mid-40s. How far above will depend because we are investing and building.

We want to grow in the next five or ten years in the business. We’re investing in things like building out our private wealth distribution business and many other areas and we’re going to continue to invest in our business. That being said, I would expect continued FRE margin expansion in the next couple of years. We have not yet given guidance on when we might get to, for example, 50%, but 45% is a step along the way. Understood.

Thanks so much for taking my question.

Unidentified Speaker: And

John Winklevide, Chief Executive Officer, TPG: we will move next to Brian Bedell with Deutsche Bank.

Brian Bedell, Analyst, Deutsche Bank: Great. Thanks. Thanks for taking my question. Maybe just to go back to your comments on fundraising outlook. Great to see the really strong momentum here.

I think Jack you mentioned 26, you obviously expect to be a robust year similar to ’25. Just in terms of the new funds that you’re bringing to market, just wanted to it seems like ’26 should be even stronger than ’25. I just wanted to make sure if I understand that correctly. And the reason I’m asking is because I think you’ve got Asia coming, real estate obviously is a large stem function up, RISE IV is coming to the market. You still have capital in the market and then probably continued growth in credit and wealth.

So I

John Winklevide, Chief Executive Officer, TPG: just wanted to understand if that’s the case and if I

Brian Bedell, Analyst, Deutsche Bank: could just throw in a question on the deployment in the transition infrastructure fund with Kinetic. Is that continuing to increase that deployment capability in terms of how you’re seeing that form for fundraising for the rise climate segment of funds?

John Winklevide, Chief Executive Officer, TPG: Yes, do it first. Thanks for the one question, Brian. Look, on the outlook, I was intentional in my words. I think next year will be a continued robust year. There are some puts and takes versus this year.

Obviously, had a very large initial close for TG Capital Healthcare Partners. We do expect to raise some more money for that in the fourth quarter. So that next year will be likely less capital raised because we’ve already raised well over half of our target. We will have by the end of this year. On the growth side, we had a big final close for growth earlier this year and our growth franchise in The U.

S. Won’t be in the market next year. On the real estate side, one of the things that might be throwing you off, I think when I talked about our flagship real estate launch being an important launch next year, the way we’re currently thinking about it is the majority of that capital will probably be raised the following year because we probably won’t have a first close until the 2026. So and you’re right that we absolutely do expect continued robust fundraising on the credit platform as John mentioned. So when you cut through all that, we see some puts and takes.

But this year being as strong a year as it was up more than 50% over last year, some might have expected a step down next year, we don’t expect that. Just on your sneak in second question on deployment around TI and climate, I guess, generally. I think, first of all, we’re across the strategies, would say that we are seeing really unique deployment opportunities, really unique. And we like what we’re seeing. We think we’re going to generate differentiated returns.

And again, we’ve said this before, but we think that across these various types of climate strategies between private equity and infrastructure that it’s a generational investment opportunity and it’s a global opportunity as well. So I think that we’ve been quite active. Just to give just to put a pin in that, I think we’ve deployed $2,300,000,000 of capital this year across those strategies. And obviously Kinetic being the most recent on the TI side, that was our second investment in TI. And so that continues to be a portfolio that we’re building and we’re fundraising alongside of the contemporaneous with that.

And I think when you look at the trends going on around in the world in terms of the demand for power on a global basis, electrification, co location opportunity, storage, etcetera, we’re seeing really interesting opportunities. And again, we’re seeing it on a global scale. So we’re very enthusiastic about what that ultimately will look like and we’re it’s a very active strategy.

Brian Bedell, Analyst, Deutsche Bank: That’s great color. Thank you so much.

John Winklevide, Chief Executive Officer, TPG: And we will take our next question from Michael Cyprys with Morgan Stanley.

Unidentified Speaker: I wanted to ask about M and A. You guys have done a number of inorganic transactions already over the last couple of years. So just curious, as you look at the platform today, what’s left to fill in to accelerate one scale or presence? Where might inorganic activity be helpful? And just curious what you’re seeing on that front?

And how do the recent transactions inform your approach as you look forward?

John Winklevide, Chief Executive Officer, TPG: Yes, sure. Thanks, Michael. Look, think, first of all, I would say that we have been as you know, we’ve been very focused and intentional about the type of inorganic activity that we’ve engaged in. And we feel like where we have executed, we’re executing really, really well. And there’s a lot there’s I think you an have appreciate we’ve talked about this before.

You have an appreciation for the fact that it begins with the deal and but that’s sort of like the tip of the iceberg and most of it is underneath from there in terms of execution, integration and really making it work, cultural engagement and then growth. And we feel like we have been very successful at it and we feel like we’ve developed a lot of skills in terms of understanding how to do it. So it’s something that we feel will be a kind of arrow in our quiver in terms of growth on an ongoing basis. One of the other things that I think we see happening is that because of the overall trend line in our industry, which is I think the kind of the bigger getting bigger trend toward consolidation. I think that one of the things that we see happening is we because of having established our bona fides and being able to do this well, I think we are the recipient of a lot of incoming across a range of different strategies.

And that is very helpful because obviously we have a good look at what’s going on. And in many cases, we’re finding is that potential targets or counterparties want to engage with us on a proprietary basis, which is also an attractive way to kind of at least evaluate whether or not it’s something that makes sense for us. And if so, then execute on it on terms that make sense. So we’re I would say that our overall kind of business development effort is pretty active just in terms of seeing opportunities and evaluating them. We’re going be picky, as you would expect.

There are areas that I think without getting into too much detail, I think there are areas in the market that continue to be interesting to us obviously. And there’s not only product strategies, but also geographies as well. I think that we’re continuing to focus on how to continue to broaden our footprint in Europe as an example. And there may be sort of opportunities there that develop for us. Nothing to do right now today, but I mean that’s just an area that interests us because we are a global firm.

We could find opportunities that I would describe as kind of tuck ins or fill ins in our credit strategy that might be interesting to us. There are areas potentially related to the build and infrastructure that might be interesting to us because obviously we have two pieces to that now TI and then also PepperTree. And I think we want to continue to think about how does that part of the market expand for us. There’s a lot of interesting developments going on in the market as it relates to secondaries in our market. As the primary markets across all the asset classes grow, I think the secondary flows are going to become more and more important to the market.

So that’s another really interesting area.

Unidentified Speaker: Great. Thanks so much.

John Winklevide, Chief Executive Officer, TPG: And we will take our next question from Bill Katz with TD Cowen. Great. Thank you very much for taking the question. I appreciate all the guidance and discussion so far. Maybe just two areas of growth seems to still be in the wealth and the capital markets areas.

I wonder if you can maybe update us on maybe where you see the incremental spend and then on the wealth side in particular, just sort of curious, you mentioned a number of times new products, new geographies maybe unpacked that a little bit in terms of where you see the greatest opportunity in near term? Thank you. Jack, why don’t you start with wealth? Sure. Hey, Bill, thanks for the question.

The wealth is a multiyear build for The starting point was launching TPOP alongside our existing products and the existing evergreen products MVP and TCAP and getting kind of the flagship private equity product in the wealth channel on the evergreen side launched effectively. And that as I mentioned is off to a great start with lots of room to grow from here. 900,000,000 is latest AUM number we’ve announced there and we see substantial continued growth through the rest of this year and next year. Part of that growth, of that so far has been almost entirely on three platforms. In the platforms in which we’re selling TPOC, we are one of the most attractive or high volume private equity evergreen products, if not the most active.

So it’s extremely well received, but we’re very early in the expansion across additional distribution partners. So through the course of next year, you’ll see that. You’ll see us expanding partnerships to broaden out and globalize effectively the placement of TPOP. Along with that, there are several additional products that we feel like we’re well suited to bring to market. The first would probably strategy credit interval fund.

We talked about how well received TCAP is as a direct lending BDC. The other businesses as we’ve talked about that we have in credit through Angelo Gordon are also distinctive businesses and structured credit, credit solutions, etcetera. So having a credit interval fund that much like keep up feeds on all of our private equity deal flow that benefits from all of the deal flow across our credit platform. We’re seeing strong demand for that in the early mid stage discussions with potential channel partners who want to see that product. And then the next tent pole would be in real estate.

We have no non traded REIT at this point. We have an excellent real estate business that’s diversified across lots of different components. So we’re in active discussions with channel partners who would like to see a real estate product from us. So that’s kind of a near term roadmap with more to come. I think on capital markets, think that you should expect that our capital markets business will continue to grow.

Obviously, it’s a transactional business. So the general flow of opportunities is correlated capital markets will be correlated to that. But one of the things that has happened over the course of and I’m sure you’ve seen it in the trajectory of our revenues over the course of the last several years is that as we have been embedding our capital markets capabilities into each of our platforms and each of our product areas, we’re involved in as a capital provider, as a capital arranger across almost all of our businesses now. And with the addition of our credit franchise, it’s taken sort of a next step with respect to our ability to use the broker dealer and use our capital markets capabilities to distribute and to source. So I think that our outlook for that is that as the firm grows, it will continue to grow.

Thank you. This concludes the Q and A portion of today’s call. I would now like to turn the call back over to Gary Stein for closing remarks.

Gary Stein, Head of Investor Relations, TPG: Great. Thanks, operator. Thank you all for joining us today. If you have any additional questions, please feel free to follow-up directly with the IR team.

John Winklevide, Chief Executive Officer, TPG: This concludes today’s TPG’s third quarter twenty twenty five earnings call and webcast. You may disconnect your line at this time, and have a wonderful day.

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