Thoughts on TPG Sixth Street Partners
Does anyone have any insight in TPG’s Special Situations Group? Couldn’t find much on WSO but seems like the team operates multiple strategies (distressed debt, real estate, infra etc) and have a pretty flexible mandate overall. From what I’ve found on internet it seems like they have managed to grow AUM from $1-$2bn in 2009 to $27bn now so they must have performed quite well?
Is there anyone that can shed some more light on the group?
- What is the background of most juniors?
- How’s the performance been?
- What’s the work / life balance like?
- Is it more like a HF than a PE?
- Do they recruit in the same cycle as other MFs?
- How are they perceived by the market?
- I know this is an unpopular question here but how prestigious is it? Does it fall in the same bucket as other top tier distressed shops, i.e. Avenue, Baupost, Silver Point, KS etc?
Any insight would be much appreciated!
Bump.
Much more focused on private deals than the public markets, but at the higher end of the risk spectrum relative to most direct lending funds. They aren't necessarily always funding into “distressed” special situations, but providing debt capital for growth companies. Overall quite different than the HFs you mentioned which are naturally oriented towards more liquid/secondary credit, although there is some crossover (e.g., DIPs and rescue financing). As with most public vs. private investing comparisons, junior work is more about research than transaction execution / process management. Think performance has been very strong, but I believe they use leverage at the fund level to get returns up to private equity type thresholds.
Bump. Long-time lurker here.
From what I’ve heard direct lending is only a part of their strategy, done by a separate team. I heard their special situations team do some pretty cool stuff, investing across cap structures, asset classes and industries. Their strategy seems somewhat like a mix between HF and PE to me, but am curious if anyone has more info on them? Also, do they have a dedicated NY office?
yes, growth, infrastructure and specialty lending according to headhunter
bump - would love to hear updated insights
https://www.businesswire.com/news/home/20200501005457/en/TPG-Sixth-Stre…
I do not work there but have a friend that does. They are no longer part of TPG (https://www.businesswire.com/news/home/20200501005457/en/TPG-Sixth-Stre…). They mostly work on private debt deals and not as focused on distressed/liquid as the other firms you mentioned. They're basically a BDC like Ares but much smaller. Solid firm but still to be seen how the separation from TPG will affect them
Sixth Street is definitely not just "basically a BDC" (and neither is Ares) - are you talking both firms' respective BDCs, TSLX and ARCC?
Yes that is what I meant...sorry if confusing folks I was on mobile
they list all their pockets of capital on their website TOP, TAO etc. they’re not just direct lending - all the stuff in TOP and TAO are special sits type return money from 10%-25%. most of it is private type deals though. they have a team trying to do liquid distressed but it hasn’t really gone off the group. All of the special sits type stuff is done out of SF. in NYC you’ll only find TSLX and their CLOs which is all direct lending/performing credit stuff. if you want the ‘cool’ stuff you’ll have to move to SF. they’re not like a traditional distressed credit HF. a lot like GS SSG and like 30% of the people are former GS SSG
Thanks for the info! Was wondering if you could touch more on the relationship between TSLX and broader special situations at TSSP. It only mentioned that TSSP is the external manager of TSLX but I believe their gross IRR is around 20% - 25% since inception as stated on 10K. Is that a typical return profile for direct lending?
yes TSSP is the external manager for TSLX but that’s normal. TSLX is a BDC. look up externally vs. internally managed BDCs. TSLX is still a part of TSSP even though it is “externally managed” and no 25% IRR deals even on a levered basis is not at all typical for BDCs. just off the bat I would doubt the veracity of that number for TSLX. for Sixth Streets TOP and TAO vehicles I would say that makes sense. basically all TSLX does is middle market direct lending and you can find literally every single investment they’ve made in their filings so that should give you a sense of the type of stuff they do. given that TOP and TAO are private and PE style drawdown funds it will be harder to find deals that they’ve been in and executed. I know they were considering 1L Neiman loans a couple of years ago for 10% return
Pretty good summary and Sixth Street is a super legit shop. To add some color, the split from TPG shouldn't impact them much. They've been effectively independent and have had very few shared resources for years now.
also raised a structured equity / growth fund last fall (https://www.privatedebtinvestor.com/tssp-hits-hard-cap-on-debut-growth-…) if anyone has info on OP's other questions, much appreciated.
"Anonymous associate 2 in HF" is spot on
Does anyone know of TPG recruits out of undergrad or is 2 years in IB a requirement?
AFAIK Sixth Street doesn't hire for investment roles out of undergrad. There are a couple analysts that come up on LinkedIn but they look like BO roles.
They have taken kids for FO analyst roles, but you have to be diversity.
Can opine - pretty familiar with the place through friends and peers. Firm has a number of different strategies from low yield ag and infra to growth equity (new fund) and everything in between. Definitely have interesting strategies and structures, good returns on funds. Split from TPG should widen the types of deals they can do (over time, the agreement seems phased).
Culturally, fairly cutthroat. Expect long hours, minimal if any work life balance. New associates expected to work all hours (but don't tell people about it). Turnover is pretty high. Most groups run normal first year recruiting except BDC which does off cycle. They don't hire investment professionals out of college (they might do for finance team / back office). Interviews are usually case study plus a number of interviews with associates, vp/principals, and then if you're interesting, partners.
Leadership is very private which is why you don't see much about them online (didn't have an independent website until a year or two ago), and also why you won't find Glassdoor commentary.
Is the culture fairly the same across the two offices and the different groups? Or are some better than others?
https://www.psers.pa.gov/About/Board/Resolutions/Documents/2020/2020-25…
Interesting read on Sixth Street's Fundamental Strategies platform
Someone on here mentioned the high turnover. What's the typical exit for these folks? Credit hedge funds that look at more public strategies? Is the Sixth Street brand pretty well regarded standalone (since it's split from TPG I guess it's not technically a "Megafund" anymore).
Their special sits fund has $20b+ to deploy so very much still a megafund
Also sixth street is the exit opp but the people I know that have left have transitioned to strategic finance and HF
Yeah their TAO fund is pretty unique and crazy. But like most PE style funds, seems like not many associates stay on for 2-3+ years and move on to do other things. I knew a guy in my banking group that left to go to Select Equity
Does anyone know if Sixth Street undergrad internships are worth taking over top BB/EBs?
What makes you ask?
Potentially. Depends on the person and the specifics of the offers at hand.
Very prestigious special sits shop (and has now built into other strategies) with roots from Goldman SSG. Takes a large presence in a lot of distressed names and throws their weight around, a lot of which is a function of their size and the current opportunity set. A lot of smart people there and a phenomenal learning opportunity - as the posters above mentioned, they do a lot more private / process-driven investing vs. liquid / public.
They recruit on-cycle. It's a very sweaty shop and the culture can be tough, but again, great learning opportunity. They're based in SF but work along east coast hours. Great branding on your resume and opens opportunities for other top distressed / special sits opportunities, whether it's HFs / LTO shops / other large distressed managers / etc. Similarly to how Tigers typically do 2+2 on the LS side, a place like SSP is the "2 years of PE" as many distressed funds don't hire from banking or highly prefer experienced hires.
This sounds in line more or less with what I know about the firm too
Any idea on ASO comp / carry
Anyone has a view on the European RE team at SSP?
What is their infrastructure strategy like? Is it more of a core infra focus targeting 8-12% or true to the special sits nature of the broader platform pursuing opportunities in the 15-25% range?
Bump - would be interested as well
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