TPG has agreed to buy debt and real estate manager Angelo Gordon for $2.7 billion, as the U.S. private equity group makes its first major acquisition since going public last year to diversify its credit investments.
New York-based Angelo Gordon, one of the largest investors in the private credit market and a savvy player in distressed debt, will buy mostly in equity.
TPG said it would pay $970 million in cash by issuing 62.5 million new shares, with the rest in stock, and expects the deal to increase fee income by 10% next year. In first-quarter results reported Monday, TPG generated a $99 million fee-related gain, generally beating analysts’ expectations.
TPG took its shares public last year as part of a growth push by the $137 billion asset group, which many expect will help it acquire a credit-based investment manager, expanding its main focus on growth-oriented acquisitions and its “rise”. The portfolio platform focuses on sustainability and climate-based investing.
Angelo Gordon, who manages $73 billion in assets and employs 650 people worldwide, was instrumental in guiding such recent bankruptcies as Revlon and Envision Healthcare. It also has an extensive real estate financing business.
TPG, which went public in January 2022 at a valuation of $9 billion, slightly higher than its current market capitalization, hopes to use its greater size to attract the deluge of capital that is increasingly inclined to deal with a limited number of investment managers.
TPG Chief Executive Jon Winkelried said Monday that the acquisition “underscores our continued focus on growing through diversification and building scale while creating long-term shareholder value.”
Angelo Gordon co-chief executive Josh Baumgarten said the merger would add “scale” to its investment business at a time of opportunity in the credit and real estate markets.
The deals come as private credit managers increasingly replace traditional banks in financing acquisitions and even making large real estate and business loans. The deal drives a wave of private capital consolidation as asset managers look to bolster their credit investing capabilities.
Several large debt firms have been acquired in recent months, with Fortress Investment Group, another big name in the sector, expected to be bought by Abu Dhabi-based sovereign wealth fund Mubadala, the Financial Times reported last week.
TPG previously had a partnership with credit specialist Sixth Street Partners, but the partnership ended in 2020.