TPG is considering going public and it's only one of the top PE firms that have either gone public or are planning on. So I was wondering why they are doing this? Since most of them are structured as private partnerships doesn't this dilute their earnings per partner as they will probably have to pay dividends and also opens them up more public scrutiny? so why does this make sense?
And what happens to the money they raise, does it get split between the partner and employees or do they put it into the investment pool to invest in companies?
I would say at least partially as a liquidity event. The first few chapters of "King of Capital" goes over it decently well
Maybe it is the continuation of the trend, some consulting firms have gone public, so have investment banks
My understanding is that when a PE fund lists they are listing the management company. For existing partners who hold equity in the management company then can sell to incoming partners, to GP stake buyers (like Dyal Capital) or sell via IPO.
but doesn't listing the management company just dilute their potential profits?
Yes, that's right. The trade off for those selling is receiving a multiple of earnings upfront and lower economics (unless fee income grows) going forward. BX sold about 12% for $4bn when it listed so the reduced profits to BX partners doesn't seem that bad.
Doesn't this lead to greater lifetime comp for partners? They'll still get carry from current/future funds while also getting to cash out their equity of the company. I think company equity is not the same as fund carry in this situation, but folks with more experience should let me know if I'm wrong.
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