TPG, a leading global alternative asset management firm, and Angelo Gordon, a $73 billion alternative investment firm focused on credit and real estate investing, announced that the companies have entered into a definitive agreement under which TPG will acquire Angelo Gordon in a cash and equity transaction valued at approximately $2.7 billion, based on TPG Inc.’s share price as of May 12, 2023, including an estimated $970 million in cash and up to 62.5 million common units of the TPG Operating Group and restricted stock units of TPG, in each case, subject to certain adjustments. The transaction also includes an earnout based on Angelo Gordon’s future financial performance, valued at up to $400 million.
Founded in 1988, Angelo Gordon is a fully integrated and scaled multi-strategy platform with more than 650 employees across 12 offices in the U.S., Europe, and Asia. Angelo Gordon’s $55 billion1,2 credit platform offers scaled and diversified capabilities across the credit investing spectrum, including corporate credit, direct lending, and structured credit, and its $18 billion1,2 real estate platform manages dedicated value-add real estate strategies with significant reach in the U.S., Europe, and Asia, as well as a net lease strategy. Similar to TPG, Angelo Gordon has delivered significant and sustained momentum and growth, doubling its AUM over the past five years.
TPG and Angelo Gordon had a combined AUM of $208 billion1 as of December 31, 2022. Upon the close of the transaction, TPG will manage assets across a broadly diversified set of investment strategies, including private equity, impact, credit, real estate, and market solutions. The addition of Angelo Gordon marks a significant expansion into credit investing for TPG, establishing additional levers to drive organic growth and further expanding the breadth, diversification, and reach of the TPG platform. The transaction will enable TPG and Angelo Gordon to be an even stronger partner to LPs, providing investment opportunities across a broader range of asset classes and return profiles.
“This strategic transaction meaningfully expands our investing capabilities and broadens our product offering. The addition of Angelo Gordon also underscores our continued focus on growing and scaling through diversification, while driving long-term value for our shareholders,” said Jon Winkelried, Chief Executive Officer of TPG. “Following more than a year of building relationships between the leadership teams of both organizations, we are confident the combination represents a strong strategic and cultural fit and will create additional opportunities for employees of both firms. We look forward to welcoming the Angelo Gordon team as we execute on our shared vision.”
“This is a terrific partnership that provides Angelo Gordon with the scale to capitalize on the growing opportunity set we see in the credit and real estate markets, the diversification to create new solutions for our clients across the risk spectrum in all market conditions, and the opportunity to share our collective expertise, insights, and knowledge,” said Josh Baumgarten, Angelo Gordon Co-CEO and Head of Credit.
Adam Schwartz, Co-CEO and Head of Real Estate at Angelo Gordon, said, “We are proud to be joining a world-class investment platform that shares our philosophy on firm culture, investment excellence, and delivering for clients. This transaction is a testament to the team and business that we have built over nearly 35 years, and we are excited about the new and expanded opportunities ahead for our employees and LPs.”
“Both firms have grown organically over the past three decades, from private founder-led businesses into seasoned firms with next-generation executive leadership poised to accelerate further growth as part of a diversified platform,” added Jim Coulter, TPG’s Co-Founder and Executive Chairman. “There is a clear alignment of interests, values, and culture with a focus on entrepreneurship, innovation, and investment excellence. We look forward to building on our collective momentum together.”
Strategic and Financial Rationale
Marks a significant expansion into credit investing for TPG: Angelo Gordon’s platform offers scaled and diversified capabilities across the credit investing spectrum, including corporate credit and special situations, direct lending, and structured credit. Each product area is well established with strong investment performance and substantial opportunities for significant organic growth.
Offers real estate capabilities that are complementary to TPG’s current strategies: Further expands TPG’s geographic reach in Europe and Asia, broadens sourcing capabilities, and adds additional strategies, including a net lease strategy. On a combined basis, TPG will have meaningful scale with $38 billion1 of collective AUM in real estate across TPG and Angelo Gordon as of December 31, 2022.
Provides broad spectrum of alternatives solutions for clients: Creates an even more compelling partner for the largest LPs globally, expanding alternative investment opportunities across a broad range of asset classes and return profiles that offer solutions for high growth channels such as insurance, high net worth, and retail, as well as institutional clients.
Creates broader client base: Angelo Gordon brings an attractive and complementary base of long-standing clients across its credit and real estate businesses. Together there is a substantial opportunity to expand and strengthen relationships across platforms.
Unlocks significant opportunities to grow revenue and optimize and scale within the combined platform: The combined company will benefit from shared intellectual capital, including industry, sector, and investing expertise, broadened LP relationships and distribution channels, and the support of robust infrastructure to drive enhanced opportunities for growth, business expansion, new product development, and geographic reach.
Delivers strong strategic and cultural fit: Angelo Gordon’s culture is aligned with TPG’s core values: high-performing, entrepreneurial, innovative, collaborative, and transparent. Both firms have grown organically, incubating, launching, and scaling new products that have complemented and built on core competencies and are poised to accelerate growth as part of a diversified platform.
Enhances capital formation capabilities: With a more diversified product set, TPG will continue to build its distribution and expand the breadth and depth of relationships.
Key Transaction Details
TPG is acquiring Angelo Gordon in a cash and equity transaction valued at approximately $2.7 billion, based on TPG Inc.’s share price as of May 12, 2023, including an estimated $970 million in cash and up to 62.5 million common units of the TPG Operating Group and restricted stock units of TPG, in each case, subject to certain adjustments. The transaction also includes an earnout based on Angelo Gordon’s future financial performance, valued at up to $400 million.
The cash portion of the transaction will be funded from TPG’s current cash balance and undrawn revolver, and is expected to be mid-to-high single digit accretive to TPG shareholders on an FRE and After-tax DE per share basis in 2024, before any revenue or cost synergies.
Upon closing of the transaction, Angelo Gordon will become a new significant investing platform within TPG. Angelo Gordon’s Co-CEOs Josh Baumgarten and Adam Schwartz will become Co-Managing Partners of the platform, reporting to TPG CEO, Jon Winkelried.
Approvals and Closing
The transaction is subject to customary closing conditions, including HSR, international regulatory approvals, and other client and third-party consents. The transaction, which was unanimously approved by the TPG Board of Directors, is expected to close in Q4 2023.
Advisors
Ardea Partners LP acted as lead financial advisor to TPG and provided a fairness opinion to TPG’s Board of Directors. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC also acted as financial advisors to TPG. Weil, Gotshal & Manges LLP served as TPG’s lead transaction counsel. Davis Polk & Wardwell LLP, Shearman & Sterling LLP, and Cleary Gottlieb Steen & Hamilton LLP advised TPG with respect to tax, executive compensation, and investment fund matters, respectively. Goldman, Sachs & Co. LLC and Piper Sandler acted as financial advisor to Angelo Gordon and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel.