The move from Pantheon to TPG Secondaries

A year or two ago Jones left a struggling Pantheon to join TPG to co-lead their secondaries platform. Pantheon has for a while been a mess (lack of focus, historically terrible returns) when it comes to secondaries, apart from Jains credit secondaries business.

Can you imagine Matt leaving Pantheon to join TPG all to find out that Pantheon out of no where closed a 3bn+ fund and TPG struggled for 3 years to close a 750mm fund?

The TPG fund is a true joke. They invested off of TPGs balance sheet for 3 years to build a portfolio and then struggles to raise 750mm even though the pitch to new LPs was that the portfolio was 60%+ funded/invested. Apparently TPG wanted the fund to be 2-3bn in size but had to settle for 750mm...word is that they are extremely disappointed by what Woolhouse brought to the table (couldn't raise any capital)...

What a mess.

 

Oh, the world of finance can be a wild ride, can't it? It seems like Matt Jones had quite the journey moving from Pantheon to TPG. It's always a gamble when you switch teams, and it sounds like this one didn't pay off as expected.

From what you're saying, it seems like TPG's secondaries platform had a tough time raising funds, despite having a significant portion of the portfolio already funded. That's a tough pill to swallow, especially when the initial goal was to raise a fund size of 2-3 billion.

And then there's the twist of Pantheon closing a 3 billion+ fund after Jones left. Talk about timing! It's like leaving a party just before it gets really good.

But hey, that's the game, right? Sometimes you're the star player, and sometimes you're left on the bench. It's all part of the journey.

As for Woolhouse, it's unfortunate to hear that he couldn't raise the capital needed. But remember, every setback is a setup for a comeback. Who knows what the future holds?

In the end, it's all about learning from these experiences and using them to grow. After all, even in the messiest situations, there's always a lesson to be learned.

Sources: TPG Growth/Impact insight? Culture/comp/hours?, Differences between Co-invest and Secondaries?, Any info on Sixth Street Partners?, Former PE associate's perspective on these "megafunds"

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Oh, the world of finance can be a wild ride, can't it? It seems like Matt Jones' move from Pantheon to TPG Secondaries was quite the rollercoaster.

From what you're saying, Pantheon had its fair share of struggles, particularly with secondaries, except for Jain's credit secondaries business. Then, out of the blue, they close a whopping 3bn+ fund. Meanwhile, TPG, despite investing off their balance sheet for three years to build a portfolio, struggled to raise 750mm.

It's interesting to note that TPG's pitch to new LPs was that the portfolio was already 60%+ funded/invested. Yet, they had initially aimed for the fund to be 2-3bn in size and had to settle for 750mm. It sounds like there might have been some disappointment with what Woolhouse brought to the table, especially in terms of raising capital.

It's a reminder that in this industry, things can change rapidly and not always as expected. But hey, that's what makes it exciting, right? Keep your chin up and remember, every setback is a setup for a comeback!

Sources: TPG Growth/Impact insight? Culture/comp/hours?, Differences between Co-invest and Secondaries?, https://www.wallstreetoasis.com/forum/private-equity/going-from-mm-investment-bank-to-mega-fund?customgpt=1, Q&A: PE Secondaries Principal

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Tpg are solely GP-leds in the upper mid market. Fund size is a bit too small to lead so they are a syndicate player - not a great pitch to LPs.

 

I mean, who else is there?

Astorg, Blue Owl and Arctos (not 100% a GP-led fund but adjacent strategy) are all too early to tell. MS had a $3bn target I’m pretty sure and closed on $2.5bn but wouldn’t count them as “new”. Schroders just beat their target but still a small fund and not 100% GP-leds. AltEx, also small but heard they were on track to reach target. Who am I missing here?

 

ICG and Glendower raised succesful GP-led only funds. Schroders was under target because their historical returns are garbage and they skew far too LMM European in their deal flow.

Timber Bay raised an oversubscribed fund.

Portfolio Advisors were never able to raise a GP-led fund cause they hired some ex Greenhill bozos that have no idea how to invest. Now their new fund will be 80% LP-led so I imagine the GP-led MDs will simply quit.

Manulife was one of the worst raises ever, similiar story to TPG on using balance sheet capital to act as a seasoned primary.

 

Adrian is like 95% LP-leds. They buy buyout portfolios for no discount and use insane leverage to make their returns.

Harbourvest historically was 100% LP led but their latest fund is 50/50.

Blackstone is like 70/30 LP led to gp led.

 

Nico's track record while be was at Schroders was awful...single handedly generated like a 1.25x TVPI at 10% IRR buy crappy tail end euro venture. They don't just do GP led at Mill reef but also euro lmm LP LEDs.

 
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I feel like people on this sub are delusional about how hard it is to raise capital, particularly for new funds. Secondaries are an emerging asset class, LPs are still getting comfortable with them and trying to understand how to fit them into their portfolios. They aren't writing checks to people who bounce between senior roles at funds/PCA firms every few years. They want to invest in stable programs with minimal senior turnover, consistent strategy and strong returns, all things allocators look for in normal buyout funds as well. 

Pantheon did it because the program was around for years but was poorly run. They brought in a long-standing well known guy from Coller who aggressively cross-sold it to their wealth management customers with absurdly small minimums during a secondaries boom. Other firms that do that like Commonfund are viewed as unsophisticated trash. 

TPG Secondaries is a pretty new program run by a bunch of people new to secondaries. They don't have an information advantage from a FoF program, they don't have longstanding relationships with secondary brokers to give them an edge, they aren't doing really structured solutions like Whitehorse or W Capital. The argument is that the primary PE platform makes them stronger investors and the leverage structures they put in place increase returns. I'm pretty curious how newer groups trying similar strategies (Ares, Apollo etc.) will fare with the same value proposition. 

 

Are you saying how they will fare in terms of fundraising or performance? S3 got a pretty large commitment from ADIA that brought them to like $3 or $4bn in commitments so I think LPs buy their value prop. Granted, their team and strategy dynamic is also different than TPG’s.

At the end of the day, any GP-led only fund is gonna be hard to raise until the strategy’s performance is proven. I just think LPs prefer to invest in a fund that does both. If you read any of the LP surveys out there, secondaries is right at the top of the list of strategies they want to allocate to and I have to imagine they would prefer to invest with a team that’s proven on the LP-led side that they can also grow an allocation to GP-leds with.

 

Performance, after the first 1-2 funds if a firm has poor performance there is no more fundraising

With Apollo you're not understanding causation or motivation and making a generalization that isn't supported. ADIA is the whole reason S3 exists, they had a massive relationship with the firm and said we want to put a few billion towards this strategy and Apollo said sure, we will build a team to do that for you. They had the opportunity to build a fund around that solution for ADIA so they did. It's an easy way for Apollo to increase their earnings with very little incremental investment. It was an opportunistic move that we haven't really seen at other firms. The other thing is that they aren't just doing CV's, they're doing NAV lending (which is private credit), real asset CVs and structured deals. Whitehorse and W Capital are probably better comparable for them than a lot of the other secondary fund names being thrown around on this sub.

I think in 5-10 years co-mingled LP/GP secondary funds will not exist the way they do today. The investment team skill set and risk/return profile of both are so different (with one you need to understand how to look at funds and in one you need to be able to evaluate an individual portfolio company/buyout deal), large firms will eventually have separate funds for each strategy (LP stakes, GP stakes and also probably structured solutions) and then a co-mingled fund which allocated 40/40/10 or 50/50 to each of those funds. 

 

agree with you. Although can you clarify about the leverage structures? The secondary buyers usually are not the ones structuring the leverage on the portfolio companies (typically stays in place although sometimes they are recapping the business co-currently). Do you mean TPG is putting leverage on their equity checks in single asset gp-leds? 

 

Since there are some folks from the secondary industry on this thread, quick question : do you see a deterioration in GP carry rollover % in GP-led deals? 
Typically our firm has always been strict on 100%+ rollover of net carried proceeds, having the GP being a net buyer in the new deal. We are seeing an increasing volume of deals where GPs can negotiate a net cash out, or reinvesting a substantial amount of the proceeds as GP commit of a new main fund (which we view as similar to a cash out from the transaction S&U persepective). 
Wondering if new entrants are lowering the standards of alignment ?  

 

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