UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
(Exact name of registrant as specified in its charter)
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| (Zip Code) | |||||||||||
(817 ) 871-4000
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Not Applicable
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 15, 2023 , TPG Inc. issued a summary press release and a detailed earnings presentation announcing financial results for its first quarter ended March 31, 2023. The summary press release and the earnings presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this report.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibits 99.1 and 99.2 incorporated in this Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information or Exhibits 99.1 and 99.2 be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
Summary press release of TPG Inc., dated | ||||||||
Earnings presentation of TPG Inc., dated | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.
| TPG INC. | ||||||||
| By: | /s/ Jack Weingart | |||||||
| Name: | Jack Weingart | |||||||
| Title: | Chief Financial Officer | |||||||
Date: May 15, 2023
TPG Reports First Quarter 2023 Financial Results
Total assets under management of $137 billion as of March 31, 2023, an increase of 14% compared to $120 billion as of March 31, 2022
GAAP net income attributable to TPG Inc. of $25 million for the first quarter ended March 31, 2023, with basic net income per share to Class A common stock of $0.27
Fee-Related Earnings of $99 million for the first quarter ended March 31, 2023, resulting in a Fee-Related Earnings margin of 37%
After-tax Distributable Earnings of $88 million (or $0.24 per share of Class A common stock) for the first quarter ended March 31, 2023
Dividend of $0.20 per share of Class A common stock for the first quarter ended March 31, 2023
TPG announces strategic acquisition of Angelo Gordon
TPG to host conference call today at 8:00 am ET
San Francisco and Fort Worth, TX – May 15, 2023 – TPG Inc. (NASDAQ: TPG), a leading global alternative asset management firm, reported its unaudited first quarter 2023 results. TPG issued a full detailed presentation of its quarter ended March 31, 2023 results, which can be viewed through the Investor Relations section of TPG’s website at shareholders.tpg.com.
"TPG’s financial results for the first quarter continue to demonstrate the durability of our fee-related earnings-centric business model. With a near record $43 billion of dry powder and a growing pipeline of attractive investment opportunities, we believe we are well-positioned to deploy capital across our core sectors and themes in an increasingly favorable environment,” said Jon Winkelried, Chief Executive Officer. “We also announced today that TPG has agreed to acquire Angelo Gordon, a fully integrated and scaled multi-strategy alternatives platform in credit and real estate. This transaction is highly compelling and advances our position as a diversified global alternative asset manager. We’ve been focused on building long-term shareholder value and strategic diversification, and believe this announcement unlocks new avenues for growth, product innovation, and client engagement."
Dividend
TPG has declared a quarterly dividend of $0.20 per share of Class A common stock to holders of record at the close of business on May 25, 2023, payable on June 5, 2023.
Conference Call
In a separate news release this morning, TPG announced it has entered into a definitive agreement to acquire Angelo Gordon. In light of this news, TPG will host its previously scheduled earnings conference call and live webcast today at 8:00 am ET. It may be accessed by dialing (800) 245-3047 (US toll-free) or (203) 518-9814 (international), using the conference ID TPGQ123. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast will also be available and can be accessed through the Investor Relations section of TPG’s website at shareholders.tpg.com. A webcast replay will be made available on the Events page in the Investor Relations section of TPG’s website.
About TPG
TPG is a leading global alternative asset management firm, founded in San Francisco in 1992, with $137 billion of assets under management and investment and operational teams around the world. TPG invests across five multi-strategy platforms: Capital, Growth, Impact, Real Estate, and Market Solutions and our unique strategy is driven by collaboration, innovation, and inclusion. Our teams combine deep product and sector experience with broad capabilities and expertise to develop differentiated insights and add value for our fund investors, portfolio companies, management teams, and communities.
| Shareholder contact: | Media contact: | ||||
| Gary Stein | Luke Barrett | ||||
| 212-601-4750 | 415-743-1550 | ||||
| shareholders@tpg.com | media@tpg.com | ||||
Forward Looking Statements
This press release may contain “forward-looking” statements based on the Company’s beliefs and assumptions and on information currently available to the Company. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, estimated operational metrics, business strategy and plans and objectives of management for future operations, including, among other things, statements regarding the expected filing of our amended and restated certificate of incorporation, expected growth, future capital expenditures, fund performance, dividends and dividend policy, and debt service obligations.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the inability to complete and recognize the anticipated benefits of the acquisition of Angelo, Gordon & Co., L.P. and AG Funds L.P. (collectively, “Angelo Gordon”) on the anticipated timeline or at all; purchase price adjustments; unexpected costs related to the transaction and the integration of the Angelo Gordon business and operations; our ability to manage growth and execute our business plan; and regional, national or global political, economic, business, competitive, market and regulatory conditions, among various other risks.
For the reasons described above, we caution you against relying on any forward-looking statements, which should be read in conjunction with the other cautionary statements and risk factors discussed from time to time in the Company’s filings with the SEC, which can be found at the SEC’s website at http://www.sec.gov. Any forward-looking statement in this press release speaks only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise any forward-looking statement after the date of this press release, whether as a result of new information, future developments or otherwise, except as may be required by law. No recipient should, therefore, rely on these forward-looking statements as representing the views of the Company or its management as of any date subsequent to the date of the press release.
This press release does not constitute an offer of any TPG Fund.
TPG Reports First Quarter 2023 Financial Results Quarter Ended March 31, 2023
TPG | 2 ▪ Total assets under management of $137 billion as of March 31, 2023, an increase of 14% compared to $120 billion as of March 31, 2022 ▪ GAAP net income attributable to TPG Inc. of $25 million for the first quarter ended March 31, 2023, with basic net income per share to Class A common stock of $0.27 ▪ Fee-Related Earnings of $99 million for the first quarter ended March 31, 2023, resulting in a Fee-Related Earnings margin of 37% ▪ After-tax Distributable Earnings of $88 million (or $0.24 per share of Class A common stock) for the first quarter ended March 31, 2023 ▪ Dividend of $0.20 per share of Class A common stock for the first quarter ended March 31, 2023 ▪ TPG announces strategic acquisition of Angelo Gordon ▪ TPG to host conference call today at 8:00 am ET San Francisco and Fort Worth, TX – May 15, 2023 – TPG Inc. (NASDAQ: TPG), a leading global alternative asset management firm, reported its unaudited first quarter 2023 results. TPG issued a full detailed presentation of its quarter ended March 31, 2023 results, which can be viewed through the Investor Relations section of TPG’s website at shareholders.tpg.com. "TPG’s financial results for the first quarter continue to demonstrate the durability of our fee-related earnings-centric business model. With a near record $43 billion of dry powder and a growing pipeline of attractive investment opportunities, we believe we are well-positioned to deploy capital across our core sectors and themes in an increasingly favorable environment,” said Jon Winkelried, Chief Executive Officer. “We also announced today that TPG has agreed to acquire Angelo Gordon, a fully integrated and scaled multi-strategy alternatives platform in credit and real estate. This transaction is highly compelling and advances our position as a diversified global alternative asset manager. We’ve been focused on building long- term shareholder value and strategic diversification, and believe this announcement unlocks new avenues for growth, product innovation, and client engagement." Dividend TPG has declared a quarterly dividend of $0.20 per share of Class A common stock to holders of record at the close of business on May 25, 2023, payable on June 5, 2023. Conference Call In a separate news release this morning, TPG announced it has entered into a definitive agreement to acquire Angelo Gordon. In light of this news, TPG will host its previously scheduled earnings conference call and live webcast today at 8:00 am ET. It may be accessed by dialing (800) 245-3047 (US toll-free) or (203) 518-9814 (international), using the conference ID TPGQ123. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast will also be available and can be accessed through the Investor Relations section of TPG's website at shareholders.tpg.com. A webcast replay will be made available on the Events page in the Investor Relations section of TPG's website. Shareholder contact: Media contact: Gary Stein Luke Barrett 212-601-4750 415-743-1550 shareholders@tpg.com media@tpg.com TPG Reports First Quarter 2023 Financial Results
TPG | 3 TPG Reports First Quarter 2023 Financial Results About TPG TPG is a leading global alternative asset management firm, founded in San Francisco in 1992, with $137 billion of assets under management and investment and operational teams around the world. TPG invests across five multi-strategy platforms: Capital, Growth, Impact, Real Estate, and Market Solutions and our unique strategy is driven by collaboration, innovation, and inclusion. Our teams combine deep product and sector experience with broad capabilities and expertise to develop differentiated insights and add value for our fund investors, portfolio companies, management teams, and communities. Forward Looking Statements This presentation may contain “forward-looking” statements based on the Company’s beliefs and assumptions and on information currently available to the Company. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, estimated operational metrics, business strategy and plans and objectives of management for future operations, including, among other things, statements regarding the expected filing of our amended and restated certificate of incorporation, expected growth, future capital expenditures, fund performance, dividends and dividend policy, and debt service obligations. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the inability to complete and recognize the anticipated benefits of the acquisition of Angelo, Gordon & Co., L.P. and AG Funds L.P. (collectively, “Angelo Gordon”) on the anticipated timeline or at all; purchase price adjustments; unexpected costs related to the transaction and the integration of the Angelo Gordon business and operations; our ability to manage growth and execute our business plan; and regional, national or global political, economic, business, competitive, market and regulatory conditions, among various other risks. For the reasons described above, we caution you against relying on any forward-looking statements, which should be read in conjunction with the other cautionary statements included elsewhere in this presentation and risk factors discussed from time to time in the Company’s filings with the SEC, which can be found at the SEC’s website at http://www.sec.gov. Any forward-looking statement in this presentation speaks only as of the date of this presentation. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise any forward-looking statement after the date of this presentation, whether as a result of new information, future developments or otherwise, except as may be required by law. No recipient should, therefore, rely on these forward- looking statements as representing the views of the Company or its management as of any date subsequent to the date of the presentation. This presentation does not constitute an offer of any TPG Fund. Throughout this presentation, all current period amounts are preliminary and unaudited; totals may not sum due to rounding.
TPG | 4 Prior to and in connection with our initial public offering (“IPO”), we completed certain transactions as part of a corporate reorganization (the “Reorganization”), which concluded with NASDAQ listing our Class A common stock on January 13, 2022. The Reorganization included certain transfers of economic entitlements and investments that were effectuated December 31, 2021, including the transfer of certain limited partner interests in entities that (i) serve as the general partner of certain TPG funds and (ii) are, or historically were, consolidated by TPG Group Holdings (SBS), L.P. (“TPG general partner entities”) to Tarrant RemainCo I, L.P., Tarrant RemainCo II, L.P. and Tarrant RemainCo III, L.P. (“RemainCo”). The transfer of certain limited partner interests in TPG general partner entities to RemainCo resulted in the deconsolidation of TPG Funds, as the TPG general partner entities are no longer considered the primary beneficiary as of December 31, 2021. While the Reorganization did not affect, on a GAAP or non-GAAP basis, our income statement activity for the fiscal year ended December 31, 2021 or our financial statements for prior periods, this presentation includes pro forma financial data giving effect to the IPO and the Reorganization as though they had occurred on January 1, 2020. As such, the pro forma information reflects certain Reorganization adjustments, including, but not limited to, the exclusion of assets that were transferred to RemainCo, increasing the amount of performance allocations our people will receive, the inclusion of an administrative services fee paid by RemainCo to the Company, additional interest on debt incurred as part of the Reorganization, and the step-up of taxes on a public-company basis. Therefore, comparability of the pro forma information included in this presentation to prior financial data or future periods may be limited. See the Reconciliations and Disclosures section of this presentation for a full comparison of actual to pro forma financial data, reconciliations of Non-GAAP to the most comparable GAAP measures, and adjustment descriptions. Comparability Statement and Pro Forma Financial Information
First Quarter 2023 Financial Results
TPG | 6 ▪ Net income of $36 million for 1Q'23, compared to 4Q'22 net loss of $10 million, and 1Q'22 net income of $163 million ▪ Net income attributable to TPG Inc. of $25 million for 1Q'23, compared to $24 million in 4Q'22, and $41 million in 1Q'22 GAAP Statements of Operations (Unaudited) 1. Operating profit margin, defined as net income divided by total revenues, was 14.7% for 1Q'22 and 5.5% for 1Q'23. ($ in thousands, except share and per share amounts) 1Q'22 1Q'23 Revenues Fees and other $ 273,005 $ 311,471 Capital allocation-based income 837,705 331,674 Total revenues 1,110,710 643,145 Expenses Compensation and benefits Cash-based compensation and benefits 116,359 120,451 Equity-based compensation 185,911 157,293 Performance allocation compensation 523,138 221,341 Total compensation and benefits 825,408 499,085 General, administrative and other 102,264 104,873 Depreciation and amortization 8,699 8,222 Interest expense 4,638 7,418 Expenses of consolidated Public SPACs: Other 1,523 519 Total expenses 942,532 620,117 Investment income Income from investments: Net gains from investment activities 6,643 14,816 Interest, dividends and other 204 7,971 Investment income of consolidated Public SPACs: Unrealized gains on derivative liabilities 2,657 (750) Interest, dividends and other 126 2,712 Total investment income 9,630 24,749 Income before income taxes 177,808 47,777 Income tax expense 15,004 12,103 Net income(1) 162,804 35,674 Less: Net income attributable to redeemable equity in Public SPACs prior to IPO (517) — Net income attributable to other non-controlling interests prior to IPO 966 — Net income attributable to TPG Group Holdings prior to IPO 5,256 — Net income attributable to redeemable equity in Public SPACs 1,823 1,529 Net income attributable to non-controlling interests in TPG Operating Group (4,912) (25,492) Net income attributable to other non-controlling interests 118,904 34,582 Net income attributable to TPG Inc. subsequent to IPO $ 41,284 $ 25,055 Net income available to Class A common stock - Basic per share $ 0.52 $ 0.27 Net income available to Class A common stock - Diluted per share $ 0.11 $ (0.01) Weighted average shares outstanding - Basic 79,240,057 79,499,319 Weighted average shares outstanding - Diluted 308,892,698 309,140,849
TPG | 7 Operating Metrics ($B) Non-GAAP Financial Measures ($M) First Quarter and Last Twelve Months Highlights Actual Actual Actual Pro Forma Actual 1Q'22 1Q'23 1Q'22 LTM 1Q'22 LTM 1Q'23 LTM Fee-Related Revenues ("FRR") $241 $265 $915 $921 $1,111 Fee-Related Earnings (“FRE”) 92 99 237 351 461 Realized Performance Allocations, Net 122 5 1,056 321 165 After-Tax Distributable Earnings (“After-tax DE”) 199 88 1,339 672 589 1Q'22 4Q'22 1Q'23 Assets Under Management (“AUM”) $120.4 $135.0 $137.1 Fee Earning Assets Under Management (“FAUM”) 64.2 77.9 78.8 Net Accrued Performance Allocations 0.8 0.6 0.7 Available Capital 30.3 43.0 42.7 1Q'22 1Q'23 1Q'22 LTM 1Q'23 LTM Value Creation 7% 3% 33% 4% Capital Raised $5.4 $2.0 $24.5 $26.6 Capital Invested 4.4 2.3 22.3 14.4 Realizations 4.8 2.3 28.8 13.1 ▪ 1Q'23 FRR of $265 million increased 10% versus 1Q'22, with 1Q'23 FRE of $99 million and 1Q'23 After-tax DE of $88 million ▪ Total AUM of $137 billion, up 14% in the last twelve months; Fee Earning AUM of $79 billion, up 23% during the same period Note: Pro forma financial measures are on an adjusted basis, assuming the Reorganization and IPO occurred on January 1, 2020. See the Reconciliations and Disclosures section of this presentation for a full comparison of actual to pro forma financial data, reconciliations of Non-GAAP to the most comparable GAAP measures, and adjustment descriptions.
TPG | 8 Non-GAAP Financial Measures ▪ FRE increased 8% from $92 million in 1Q'22 to $99 million in 1Q'23; FRE margin decreased to 37% in 1Q'23 compared to 38% in 1Q'22 ▪ FRE of $99 million in 1Q'23 decreased 28% from $139 million in 4Q'22; FRE margin decreased from 45% in 4Q'22 to 37% in 1Q'23 ▪ After-tax DE of $88 million in 1Q'23, a decrease from $227 million in 4Q'22 and $199 million in 1Q'22, driven primarily by lower realized performance allocations, net Note: Pro forma financial measures are on an adjusted basis, assuming the Reorganization and IPO occurred on January 1, 2020. See the Reconciliations and Disclosures section of this presentation for a full comparison of actual to pro forma financial data, reconciliations of Non-GAAP to the most comparable GAAP measures, and adjustment descriptions. 1. Realized investment income and other, net includes activity considered non-core to our Fee-Related Earnings operations, including $11 million of expenses in 1Q’23 related to the proposed transaction with Angelo, Gordon & Co., L.P. and AG Funds L.P., and $24 million of professional fees relating to our initial public offering in 1Q’22. Actual Actual Actual Pro Forma Actual ($ in thousands) 1Q'22 1Q'23 1Q'22 LTM 1Q'22 LTM 1Q'23 LTM Fee-Related Revenues Management Fees $ 202,731 $ 247,998 $ 766,867 $ 766,867 $ 975,127 Transaction, monitoring and other fees, net 26,756 4,672 102,675 102,675 86,994 Other Income 11,045 12,783 45,117 50,969 48,806 Fee-Related Revenues 240,532 265,453 914,659 920,511 1,110,926 Fee-Related Expenses Compensation and benefits, net 98,187 100,155 499,898 391,389 394,936 Operating expenses, net 50,362 66,014 177,827 177,827 254,841 Fee-Related Expenses 148,549 166,169 677,725 569,216 649,777 Fee-Related Earnings 91,983 99,284 236,934 351,295 461,151 Realized performance allocations, net 122,192 5,025 1,055,674 321,296 165,216 Realized investment income and other, net(1) 7,293 (5,175) 92,018 71,438 29,570 Depreciation expense (1,571) (1,131) (6,990) (6,990) (4,149) Interest expense, net (4,431) (1,033) (15,721) (18,715) (10,398) Distributable Earnings 215,466 96,970 1,361,914 718,323 641,390 Income taxes (16,433) (9,128) (22,434) (46,055) (52,318) After-Tax Distributable Earnings $ 199,033 $ 87,842 $ 1,339,480 $ 672,268 $ 589,072
TPG | 9 $92 1Q'22 $203 $248 $80 $106 $34 $37 $42 $47$28 $41 $19 $17 1Q'22 1Q'23 ▪ 1Q'23 FRR decreased 14% over 4Q'22 primarily driven by lower capital markets fees, and increased 10% over 1Q'22 due to an increase in management fees stemming from FAUM growth of 23% in the last twelve months ▪ Fee-Related Expenses in 1Q'23 remained flat when compared to 4Q’22, and increased compared to 1Q'22 primarily due to higher professional fees and travel expenses ▪ 1Q’23 LTM FRE margin of 42%; FRE margin was 37% in 1Q'23, a decrease from 45% in 4Q'22 and 38% in 1Q'22 Fee-Related Earnings Note: Pro forma financial measures are on an adjusted basis, assuming the Reorganization and IPO occurred on January 1, 2020; see the Reconciliations and Disclosures section of this presentation for a full reconciliation and description of adjustments. 1. There are no pro forma adjustments to management fees, and therefore the by-platform breakdown does not change between actual and pro forma figures. Fee-Related Earnings Management Fees by Platform(1) ($M) ($M) +22% $461 1Q'23 LTM $99 1Q'23 $237 $351 1Q'22 LTM Actual Pro Forma $767 $975 $335 $408 $149 $145 $132 $185$81 $167 $70 $70 1Q'22 LTM 1Q'23 LTM Capital Growth Impact Real Estate Market Solutions +27%
TPG | 10 $199 1Q'22 55% 45% $589 1Q'23 LTM Distributable Earnings ▪ After-tax DE decreased by 61% from $227 million in 4Q'22 to $88 million in 1Q'23, mainly due to a decline in realized performance allocations, net and a 28% decrease in FRE ▪ After-tax DE decreased from $199 million in 1Q'22 to $88 million for 1Q'23 primarily due to a decrease in realized performance allocations, net After-Tax DE Distributable Earnings Mix 4Q'22 1Q'23 ($M) Note: Pro forma financial measures are on an adjusted basis, assuming the Reorganization and IPO occurred on January 1, 2020; see the Reconciliations and Disclosures section of this presentation for a full reconciliation and description of adjustments. $88 1Q'23 Actual Pro Forma $1,339 $672 1Q'22 LTM FRE All Other Sources of Pre-tax DE 102%
TPG | 11 Growth $1 Impact $— Real Estate $4 Capital $145 Growth $13 Impact $2 Real Estate $5 Market Solutions $1 ▪ Realized performance allocations, net were $5 million in 1Q'23, driven by TREP III in the Real Estate platform and TTAD I in the Growth platform ▪ Realized performance allocations, net for 1Q'23 LTM were $165 million driven by TPG VII, TPG VIII, Asia VII, and THP I in the Capital platform, as well as TTAD I and Growth IV in the Growth platform Realized Performance Allocations, Net 1Q'23 Realized Performance Allocations, Net 1Q'23 LTM Realized Performance Allocations, Net ($M) ($M) Total $165 Total $5 Capital Growth Impact Real Estate Market Solutions <$1
TPG | 12 643 +71 (5) 709 4Q'22 Value Creation & Other Realized Gains 1Q'23 $406 $164 $80 $26 $33 Capital Growth Impact Real Estate Market Solutions Net Accrued Performance Allocations Value Creation 1Q'23 1Q'23 LTM Capital 3.5% 5.0% Growth 1.4% 2.8% Impact 7.3% 10.4% Real Estate (0.2%) (4.0%) Market Solutions(1) 4.1% 1.2% Total 3.2% 4.2% Net Accrued Performance Allocations by Fund Vintage ($M) 4Q'22 1Q'23 2017 & Prior $298 $310 2018 54 49 2019 193 223 2020 62 70 2021 35 55 2022 1 2 Total $643 $709 1Q'23 Net Accrued Performance Allocations 1Q'23 Net Accrued Performance Allocations Walk ($M) Total $709 ($M) 1. Due to the nature of their strategy, Value Creation in the Market Solutions platform above includes information for certain funds as of December 31, 2022. Accordingly, those funds’ performance information does not reflect any fund activity for the quarter ended March 31, 2023 and therefore does not cover the same period presented for other funds. Any activity occurring during the quarter ended March 31, 2023 will be reflected in the performance information presented in future reporting.
TPG | 13 GAAP Balance Sheet (Unaudited) ▪ Our investments increased $201 million, or 4%, from 4Q'22 to 1Q'23, mainly driven by a 3% increase in the value of our portfolio companies for 1Q'23 ▪ Cash decreased to $932 million in 1Q'23 primarily due to the distribution of proceeds received 1. Includes TPG Inc. Class A and B common stock as well as additional paid-in-capital and retained earnings. ($ in thousands) 4Q'22 1Q'23 Assets Cash and cash equivalents $ 1,107,484 $ 931,946 Investments 5,329,868 5,530,841 Other assets 845,197 843,426 Assets of consolidated Public SPACs 659,189 661,109 Total assets 7,941,738 7,967,322 Liabilities, redeemable equity and equity Liabilities Debt obligations 444,566 444,733 Due to affiliates 139,863 232,815 Accrued performance allocation compensation 3,269,889 3,225,492 Other liabilities 324,261 382,062 Liabilities of consolidated Public SPACs 23,653 24,429 Total liabilities 4,202,232 4,309,531 Redeemable equity attributable to consolidated Public SPACs 653,635 656,347 Equity TPG Inc.(1) 509,672 509,216 Other non-controlling interests 2,576,199 2,492,228 Total equity 3,085,871 3,001,444 Total liabilities, redeemable equity and equity $ 7,941,738 $ 7,967,322
TPG | 14 Non-GAAP Balance Sheet ▪ Cash and cash equivalents of $619 million at the end of 1Q'23 ▪ At the end of 1Q'23, our net cash(1) was $169 million, and we had an undrawn $700 million credit facility ▪ Our borrowings include securitized notes with a principal amount of $250 million, which are backed by $489 million in pledged assets as of 1Q'23, and a senior unsecured term loan with a principal amount of $200 million that was issued as part of the Reorganization ▪ Accrued performance allocations increased to $709 million in 1Q'23, primarily driven by TPG VII, TPG VIII, and THP I in the Capital platform plus Rise Climate in the Impact platform 1. Net cash comprised of $619 million of cash and cash equivalents less $450 million in debt principal. ($ in thousands) 4Q'22 1Q'23 Book Assets Cash and cash equivalents $ 691,687 $ 618,608 Restricted cash 13,166 13,277 Accrued performance allocations 642,519 708,868 Investments in funds 576,814 597,384 Other assets 576,241 532,340 Total Book Assets 2,500,427 2,470,477 Book Liabilities Accounts payable, accrued expenses and other 48,183 72,934 Secured borrowings, net 245,259 245,336 Senior unsecured term loan, net 199,307 199,397 Total Book Liabilities 492,749 517,667 Net Book Value $ 2,007,678 $ 1,952,810
Operating Metrics
TPG | 16 $64 $79 $25 $36 $11 $11$11 $13$11 $13 $6 $6 1Q'22 1Q'23 $120 $137 $57 $68 $22 $24 $14 $17$18 $19$10 $9 1Q'22 1Q'23 Assets Under Management and Fee Earning AUM ▪ 1Q'23 AUM rose 14% over 1Q'22 to $137.1 billion, driven by value creation of 4% for the last twelve months and capital raised of $26.6 billion over the same period, which included $9.3 billion in TPG IX and $3.4 billion in Asia VIII within the Capital platform, and $2.5 billion in TREP IV within the Real Estate platform; this was partially offset by realizations totaling $13.1 billion in the last twelve months ▪ FAUM increased 23% in 1Q'23 over 1Q'22 to $78.8 billion, driven primarily by TPG IX, Asia VIII, and THP II in the Capital platform, TREP IV in the Real Estate platform, and Rise III in the Impact platform Assets Under Management Fee Earning AUM ($B) ($B) +14% +23% Capital Growth Impact Real Estate Market Solutions
TPG | 17 1% 6% 86% 4% 3% —% 5% 88% 2% 5% FAUM by Remaining Duration 11% 50% 32% 2% 5% Assets Under Management and Fee Earning AUM Duration AUM by Duration at Inception Note: For the grouping of years on duration, 0-4 Years represents a term equal to 4 years or less; 5-9 Years represents a term greater than 4 and less than or equal to 9; 10+ Years represents a term greater than 9. 1. Defined as the number of years between fund activation and contractual fund winddown, prior to any extensions, as of March 31, 2023. 2. Defined as the number of years between March 31, 2023 and contractual fund winddown, prior to any extensions. ▪ At the end of 1Q'23, approximately 90% of our AUM and 90% of our FAUM was in perpetual or long-dated funds with a duration(1) of 10 or more years (prior to any extensions) ▪ At the end of 1Q'23, approximately 85% of our FAUM had a remaining lifespan(2) of 5 or more years, with 34% in vehicles that have 10 or more years remaining (including those considered perpetual) Total $137B Total $79B FAUM by Duration at Inception Total $79B ~90% ~85%~90% 0-4 Years 5-9 Years 10+ Years Perpetual Capital Subject to Periodic Redemption <1
TPG | 18 Capital $2,146 Real Estate $989Capital $3,598 Growth $2,997 Impact $817 Real Estate $1,182 Market Solutions $1,038 ▪ AUM Subject to Fee Earning Growth totaled $12.8 billion at the end of 1Q'23 and represents capital commitments that, once deployed, generate new management fees (AUM Not Yet Earning Fees) or generate a higher rate of management fees (FAUM Subject to Step-Up) ▪ At the end of 1Q'23, our AUM Subject to Fee Earnings Growth represents 16% of FAUM and the potential fee-related revenue opportunity associated with both AUM Not Yet Earning Fees and FAUM Subject to Step-Up is estimated at approximately $69 million annually(1) AUM Not Yet Earning Fees FAUM Subject to Step-Up ($M) ($M) Total $9,632 Total $3,135 AUM Subject to Fee Earning Growth 1. Represents the sum of the gross revenue opportunity for each non-legacy fund with unallocated capital, the deployment of which would result in incremental management fees being earned. Revenue opportunity for each fund is calculated as (a) the incremental amount of unallocated capital that would be invested to achieve a range of 90%-100% total deployment of the original commitments of the fund, multiplied by (b) the incremental fee rate that we anticipate would be earned on invested capital and (c) the proportion of the fund's commitments that are expected to pay fees based on the amount of invested capital. Capital Growth Impact Real Estate Market Solutions
TPG | 19 AUM Rollforward Note: For Market Solutions, capital raised in our SPAC vehicles represents funds raised in the SPAC IPO, including forward purchase agreements and private investment in public equity (PIPE) commitments, and realizations are considered to occur at business combination with a target, in the amount of capital raised; for our hedge funds, capital raised represents new fund subscriptions. 1. Changes in investment value consists of changes in fair value, capital invested and available capital and other investment activities, including the change in net asset value of our hedge funds. ▪ AUM increased 2% over 1Q'23, and $16.7 billion, or 14%, in the last twelve months ▪ AUM activity in 1Q'23 was driven by capital raised of $2.0 billion and changes in investment value of $2.4 billion, offset by realizations of $2.3 billion ▪ AUM growth for the last twelve months was driven by $26.6 billion of capital raised, including $16.1 billion in the Capital platform and $3.4 billion in the Impact platform, partially offset by $13.1 billion of realizations ▪ Changes in investment value increased over the last twelve months largely due to value creation of 4% Three Months Ended March 31, 2023 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total AUM Balance as of Beginning of Period $ 66,392 $ 23,138 $ 16,429 $ 19,503 $ 9,571 $ 135,034 Capital Raised 1,023 398 360 51 193 2,025 Realizations (1,191) (233) (57) (848) (11) (2,340) Changes in Investment Value(1) 1,488 284 676 630 (654) 2,423 AUM as of end of period $ 67,712 $ 23,587 $ 17,408 $ 19,336 $ 9,099 $ 137,142 Last Twelve Months Ended March 31, 2023 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total AUM Balance as of Beginning of Period $ 56,770 $ 22,099 $ 13,806 $ 17,812 $ 9,912 $ 120,399 Capital Raised 16,109 2,556 3,447 2,783 1,706 26,601 Realizations (7,080) (2,204) (340) (3,100) (358) (13,083) Changes in Investment Value(1) 1,913 1,136 495 1,841 (2,160) 3,225 AUM as of end of period $ 67,712 $ 23,587 $ 17,408 $ 19,336 $ 9,099 $ 137,142
TPG | 20 FAUM Rollforward 1. Fee earning capital raised represents capital raised by our funds for which management fees calculated based on commitments were activated during the period. 2. Net change in actively invested capital includes capital invested during the period, net of return of capital distributions and changes in net asset value of hedge funds. It also includes adjustments related to funds with a fee structure based on the lower of cost or fair value. 3. Reduction in fee base represents decreases in the fee basis for funds where the investment or commitment fee period has expired, and the fee base has reduced from commitment base to actively invested capital. It also includes reductions for funds that are no longer fee paying. ▪ FAUM increased $0.9 billion in 1Q'23 and increased $14.6 billion in the last twelve months, an increase of 1% and 23%, respectively ▪ Increases in 1Q'23 were primarily driven by fee earning capital raised ▪ In the last twelve months, increases were driven by fee earning capital raised in TPG IX, Asia VIII, and THP II in the Capital platform, TREP IV in the Real Estate platform, and Rise III in the Impact platform Three Months Ended March 31, 2023 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total FAUM Balance as of Beginning of Period $ 35,371 $ 10,830 $ 12,739 $ 13,324 $ 5,681 $ 77,945 Fee Earning Capital Raised(1) 439 144 108 7 93 791 Net Change in Actively Invested Capital(2) (132) 109 137 69 (75) 109 Reduction in Fee Base of Certain Funds(3) — — — — — — FAUM as of end of period $ 35,678 $ 11,084 $ 12,984 $ 13,400 $ 5,699 $ 78,845 Last Twelve Months Ended March 31, 2023 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total FAUM Balance as of Beginning of Period $ 25,483 $ 10,672 $ 11,222 $ 10,744 $ 6,084 $ 64,205 Fee Earning Capital Raised(1) 14,244 144 2,020 2,427 936 19,772 Net Change in Actively Invested Capital(2) (486) 775 224 229 (1,321) (579) Reduction in Fee Base of Certain Funds(3) (3,563) (507) (482) — — (4,553) FAUM as of end of period $ 35,678 $ 11,084 $ 12,984 $ 13,400 $ 5,699 $ 78,845
TPG | 21 Other Operating Metrics Capital Raised 1Q'22 1Q'23 1Q'22 LTM 1Q'23 LTM Capital $ 233 $ 1,023 $ 3,925 $ 16,109 Growth 49 398 4,791 2,556 Impact 528 360 7,689 3,448 Real Estate 4,564 51 6,029 2,782 Market Solutions(1) 74 193 2,019 1,706 Total $ 5,448 $ 2,025 $ 24,452 $ 26,601 ▪ Increased fundraising in 1Q'23 LTM over 1Q’22 LTM, particularly in the Capital platform; at the end of 1Q'23, we had $42.7 billion of capital available for deployment 1. Within Market Solutions, capital raised at our hedge fund represents new fund subscriptions. 2. Within Market Solutions, capital invested and realizations in our SPAC vehicles represent funds raised in the SPAC IPO, including forward purchase agreements and private investment in public equity (PIPE) commitments, which are considered to occur at business combination with a target. Available Capital 1Q'22 1Q'23 Capital $ 9,507 $ 20,154 Growth 4,644 4,467 Impact 6,907 6,750 Real Estate 6,746 8,778 Market Solutions 2,461 2,502 Total $ 30,265 $ 42,651 Capital Invested 1Q'22 1Q'23 1Q'22 LTM 1Q'23 LTM Capital $ 1,800 $ 341 $ 10,807 $ 4,791 Growth 442 242 2,622 2,923 Impact 1,528 1,160 2,749 3,299 Real Estate 587 363 4,635 2,730 Market Solutions(2) 91 145 1,525 613 Total $ 4,448 $ 2,251 $ 22,338 $ 14,356 Realizations 1Q'22 1Q'23 1Q'22 LTM 1Q'23 LTM Capital $ 3,893 $ 1,191 $ 19,222 $ 7,080 Growth 253 233 4,164 2,204 Impact 265 57 1,336 341 Real Estate 321 848 2,958 3,100 Market Solutions(2) 55 11 1,095 358 Total $ 4,787 $ 2,340 $ 28,775 $ 13,083 (All tables in $M)
Supplemental Details
TPG | 23 1Q'23 GAAP and Non-GAAP Performance Allocations 1. The TPG Operating Group Excluded entities’ performance allocations are not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us. We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022. 2. Non-GAAP adjustments represent the exclusion of performance allocations that are not attributable to the TPG Operating Group Common Unit holders. Three Months Ended March 31, 2023 GAAP Less: GAAP GAAP Less: Non-GAAP Non-GAAP ($ in thousands) Total Unrealized Realized Adjustments(2) Realized Capital TPG VIII $ 119,038 $ 119,038 $ — $ — $ — TPG VII 49,259 49,259 — — — THP I 34,385 34,385 — — — AAF 22,985 22,985 — — — Asia VI 10,384 10,384 — — — THP II 2,730 2,730 — — — TPG IX 1,714 1,714 — — — TES 519 519 — — — Asia VII (7,310) (7,310) — — — Excluded Assets(1) (48,369) (175,762) 127,393 127,393 — Total Capital 185,335 57,942 127,393 127,393 — Growth Growth IV 9,460 9,460 — — — Growth III 5,068 5,068 — — — TDM 3,897 3,897 — — — Growth V 3,135 3,135 — — — TTAD I 1,344 (3,867) 5,212 4,115 1,097 Excluded Assets(1) 11,996 11,440 555 555 — Total Growth 34,900 29,133 5,767 4,671 1,097 Impact Rise Climate 78,952 78,952 — — — Rise II 19,736 19,736 — — — Rise I (6,472) (7,009) 537 421 116 Total Impact 92,216 91,679 537 421 116 Real Estate TREP III (4,746) (23,807) 19,061 15,249 3,812 Excluded Assets(1) (4,847) (4,847) — — — Total Real Estate (9,593) (28,654) 19,061 15,249 3,812 Market Solutions TPEP 7,711 7,711 — — — NewQuest III 4,984 4,984 — — — NewQuest IV 154 154 — — — Total Market Solutions 12,849 12,849 — — — Total $ 315,707 $ 162,948 $ 152,758 $ 147,734 $ 5,025
TPG | 24 1Q'23 LTM GAAP and Non-GAAP Performance Allocations 1. The TPG Operating Group Excluded entities’ performance allocations are not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us. We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022. 2. Non-GAAP adjustments represent the exclusion of performance allocations that are not attributable to the TPG Operating Group Common Unit holders. Last Twelve Months Ended March 31, 2023 GAAP Less: GAAP GAAP Less: Non-GAAP Non-GAAP ($ in thousands) Total Unrealized Realized Adjustments(2) Realized Capital TPG VIII $ 376,757 $ 253,569 $ 123,188 $ 97,254 $ 25,934 AAF 136,785 136,785 — — — THP I 18,745 (34,718) 53,463 42,208 11,255 THP II 5,259 5,259 — — — TES 3,176 (6,523) 9,699 7,759 1,940 TPG IX 2,860 2,860 — — — Asia VII (28,511) (120,658) 92,148 72,753 19,395 Asia VI (62,574) (70,901) 8,327 8,327 — TPG VII (189,993) (599,634) 409,641 323,406 86,234 Excluded Assets(1) (115,859) (271,238) 155,378 155,378 — Total Capital 146,645 (705,199) 851,844 707,086 144,758 Growth Growth V 60,633 60,633 — — — TDM 26,631 26,631 — — — Growth IV 16,669 (7,229) 23,897 18,876 5,021 TTAD I (5,441) (41,420) 35,979 28,409 7,570 Growth III (14,860) (26,086) 11,226 11,226 — Excluded Assets(1) (15,278) (17,041) 1,763 1,763 — Total Growth 68,354 (4,511) 72,865 60,275 12,591 Impact Rise Climate 78,952 78,952 — — — Rise II 39,997 39,997 — — — Rise I (20,680) (28,914) 8,234 6,454 1,780 Excluded Assets(1) (18,494) (18,620) 126 126 — Total Impact 79,775 71,414 8,361 6,580 1,780 Real Estate TAC+ (2,555) (2,555) — — — TREP III (38,085) (62,572) 24,487 19,589 4,897 Excluded Assets(1) (25,882) (39,236) 13,354 13,354 — Total Real Estate (66,522) (104,362) 37,841 32,943 4,897 Market Solutions NewQuest IV 13,766 13,766 — — — TPEP 10,318 4,377 5,940 4,752 1,188 TSCF (769) (769) — — — NewQuest III (15,713) (15,713) — — — Total Market Solutions 7,602 1,662 5,940 4,752 1,188 Total $ 235,855 $ (740,997) $ 976,851 $ 811,636 $ 165,215
TPG | 25 GAAP and Non-GAAP Accrued Performance Allocations As of December 31, 2022 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total GAAP Total $ 2,689 $ 1,351 $ 316 $ 220 $ 100 $ 4,677 Less: Excluded Assets(1) 234 311 — 69 — 614 Less: Non-GAAP Adjustments(2) 2,094 878 254 121 73 3,421 Non-GAAP Total $ 361 $ 162 $ 62 $ 30 $ 27 $ 643 As of March 31, 2023 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total GAAP Total $ 2,747 $ 1,380 $ 408 $ 192 $ 113 $ 4,840 Less: Excluded Assets(1) 58 323 — 64 — 445 Less: Non-GAAP Adjustments(2) 2,283 893 328 102 80 3,686 Non-GAAP Total $ 406 $ 164 $ 80 $ 26 $ 33 $ 709 1. The TPG Operating Group Excluded entities’ performance allocations are not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us. We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022. 2. Non-GAAP adjustments represent the exclusion of performance allocations that are not attributable to the TPG Operating Group Common Unit holders.
TPG | 26 After-Tax DE and Dividends Per Class A Common Stock ▪ After-tax DE attributable to TPG Inc. of $0.24 per share for 1Q'23, and $1.60 per share for 1Q'23 LTM ▪ Declared dividend of $0.20 per share for 1Q'23 on May 15, 2023, with a record date of May 25, 2023 and payable date of June 5, 2023; dividends declared total $1.35 per share for 1Q'23 LTM ($ in thousands, except share and per share amounts) 4Q'22 1Q'23 Share Reconciliation Class A common stock from IPO 79,070,565 79,070,565 Vested restricted stock units(1) 422,162 440,910 Exchange of Common Units to Class A common stock — 1,000,000 Class A common stock outstanding 79,492,727 80,511,475 ($ in thousands, except share and per share amounts) 4Q'22 1Q'23 After-Tax Distributable Earnings attributable to TPG Inc. Class A common stockholders Pre-Tax Distributable Earnings $ 251,227 $ 96,970 Less: subsidiary-level income taxes(2) (9,964) (4,501) Distributable Earnings before corporate income taxes 241,263 92,469 Percent to TPG Inc. 26% 26% TPG Inc. Distributable Earnings before corporate income taxes 61,891 23,772 Less: corporate income taxes attributable to TPG Inc.(2) (14,718) (4,627) TPG Inc. After-tax Distributable Earnings 47,173 19,146 Class A common stock outstanding 79,492,727 80,511,475 TPG Inc. After-tax Distributable Earnings per Class A common stock 0.59 0.24 Target dividend policy 85% 85% Dividend per Class A common stock $ 0.50 $ 0.20 Note: TPG Inc. effective DE corporate income tax rate 23.8% 19.5% 1. For the purposes of calculating our per share metrics, periods shown include events that occurred after period end but prior to the relevant record date, such as Common Unit exchanges and restricted stock units that vested and settled, as they will be entitled to a dividend on the payable date. 2. Total income taxes consist of subsidiary-level income taxes at the TPG Operating Group level and corporate income taxes borne by TPG Inc. ($ in thousands) 4Q'22 1Q'23 Subsidiary-level income taxes $ 9,964 $ 4,501 Corporate income taxes 14,718 4,627 Total income taxes $ 24,682 $ 9,128
TPG | 27 Fee-Related Earnings Per Class A Common Stock ▪ FRE attributable to TPG Inc. of $0.32 per share for 1Q'23 and $1.49 per share for 1Q'23 LTM ($ in thousands, except share and per share amounts) 4Q'22 1Q'23 Share Reconciliation Class A common stock from IPO 79,070,565 79,070,565 Vested restricted stock units(1) 422,162 440,910 Exchange of Common Units to Class A common stock — 1,000,000 Class A common stock outstanding 79,492,727 80,511,475 ($ in thousands, except share and per share amounts) 4Q'22 1Q'23 Fee-Related Earnings attributable to TPG Inc. Class A common stockholders Total Fee-Related Earnings(2) $ 138,853 $ 99,284 Percent to TPG Inc. 26% 26% TPG Inc. Fee-Related Earnings 35,620 25,524 Class A common stock outstanding 79,492,727 80,511,475 TPG Inc. Fee-Related Earnings per Class A common stock $ 0.45 $ 0.32 1. For the purposes of calculating our per share metrics, periods shown include events that occurred after period end but prior to the relevant record date, such as Common Unit exchanges and restricted stock units that vested and settled, as they will be entitled to a dividend on the payable date. 2. Fee-Related Earnings does not include income tax expense.
TPG | 28 Distributable Earnings Participating Shares Outstanding (shares) 4Q'22 1Q'23 TPG Inc. Diluted Shares Outstanding Class A common stock outstanding 79,240,058 80,492,727 Common Units exchangeable into Class A common stock 229,652,641 228,652,641 Diluted Class A common stock outstanding 308,892,699 309,145,368 Restricted Stock Units ("RSUs") IPO-related Service-based(1) 9,450,349 8,835,345 Executive Service-Vesting 1,101,695 1,101,695 Ordinary service-based RSUs 680,027 4,359,426 Total Distributable Earnings participating shares outstanding(2) 320,124,770 323,441,834 1. Includes 31,978 RSUs that have vested but have not yet been settled. 2. Excludes Executive and Ordinary Performance Condition Vesting RSUs, which are not considered participating as they either accrue dividends to be paid only upon vesting or do not participate in dividends. Periods exclude restricted stock units that vested and settled after period-end.
TPG | 29 Equity-Based Compensation Summary ($ in millions, except for share and per share amounts, as of March 31, 2023) Category Units Outstanding Compensation Expense QTD Unrecognized Compensation Expense Remaining Recognition Period(1) Legacy Equity and Other IPO-Related Awards(2) N/A $ 127.8 $ 1,358.9 2.0 - 5.0 years TPG Inc. IPO-Related RSUs(3) 9,937,040 15.8 220.2 3.4 years Subtotal 9,937,040 143.6 1,579.1 Add: TPG Inc. Ordinary service-based RSUs 4,359,426 10.0 132.3 3.1 years Total 14,296,466 153.6 1,711.4 Less: Non-employee portion of RSUs(4) (232,770) (0.7) Add: PRSU Compensation Expense 1,237,286 1.8 Add: Other(5) 2.6 Total Statement of Operations Equity-based compensation $ 157.3 1. For RSUs, this metric represents the weighted average remaining recognition period across outstanding grants. 2. Represents units granted in TPG Partner Holdings, RemainCo Partner Holdings, and other awards granted in conjunction with the IPO. 3. Excludes Executive Performance Condition Vesting RSUs (“PRSUs”), which are not considered participating; these RSUs either do not participate in dividends or accrue dividends only to be paid upon vesting. Includes 31,978 RSUs that have vested but have not yet been settled. 4. Considered a General, Administrative and Other expense for GAAP purposes. 5. Represents units granted in TPG RE Finance Trust, Inc. ▪ Equity-based compensation related to TPG Inc. ordinary service-based RSUs totaled $10.0 million in 1Q'23; the total unrecognized compensation expense related to these RSUs amounted to $132.3 million at the end of 1Q'23, and is expected to be recognized over the next 3.1 years(1)
TPG | 30 Fund Performance Metrics Note: Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 3/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Investor Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) Net MoM(9) Platform: Capital Capital Funds Air Partners 1993 $ 64 $ 64 $ 697 $ — $ 697 81% 10.9x 73% 8.9x TPG I 1994 721 696 3,095 — 3,095 47% 4.4x 36% 3.5x TPG II 1997 2,500 2,554 5,010 — 5,010 13% 2.0x 10% 1.7x TPG III 1999 4,497 3,718 12,360 — 12,360 34% 3.3x 26% 2.6x TPG IV 2003 5,800 6,157 13,733 — 13,733 20% 2.2x 15% 1.9x TPG V 2006 15,372 15,564 22,071 1 22,072 6% 1.4x 5% 1.4x TPG VI 2008 18,873 19,220 33,327 217 33,544 14% 1.7x 10% 1.5x TPG VII 2015 10,495 10,055 19,342 4,580 23,922 27% 2.3x 21% 1.9x TPG VIII 2019 11,505 10,646 2,865 14,563 17,428 50% 1.7x 33% 1.5x TPG IX 2022 9,265 513 — 659 659 NM NM NM NM Capital Funds 79,092 69,187 112,500 20,020 132,520 23% 1.9x 15% 1.7x Asia Funds Asia I 1994 96 78 71 — 71 (3%) 0.9x (10%) 0.7x Asia II 1998 392 764 1,669 — 1,669 17% 2.2x 14% 1.9x Asia III 2000 724 623 3,316 — 3,316 46% 5.3x 31% 3.8x Asia IV 2005 1,561 1,603 4,089 — 4,089 23% 2.6x 17% 2.1x Asia V 2007 3,841 3,257 5,221 353 5,574 10% 1.7x 6% 1.4x Asia VI 2012 3,270 3,244 2,655 4,481 7,136 17% 2.2x 13% 1.8x Asia VII 2017 4,630 4,344 1,922 5,823 7,745 26% 1.8x 17% 1.5x Asia VIII 2022 3,429 557 — 541 541 NM NM NM NM Asia Funds 17,943 14,470 18,943 11,198 30,141 21% 2.1x 15% 1.7x Healthcare Funds THP I 2019 2,704 2,405 821 2,824 3,645 44% 1.6x 26% 1.3x THP II 2022 2,015 225 — 289 289 NM NM NM NM Healthcare Funds 4,719 2,630 821 3,113 3,934 44% 1.6x 26% 1.3x Continuation Vehicles TPG AAF 2021 1,317 1,314 97 2,560 2,657 56% 2.0x 47% 1.8x TPG AION 2021 207 207 — 207 207 0% 1.0x (1%) 1.0x Continuation Vehicles 1,524 1,521 97 2,767 2,864 49% 1.9x 41% 1.7x Platform: Capital (excl- Legacy(15)) 103,278 87,808 132,361 37,098 169,459 23% 2.0x 15% 1.7x Legacy Funds TES I 2016 303 206 219 164 383 27% 1.8x 19% 1.6x Platform: Capital $ 103,581 $ 88,014 $ 132,580 $ 37,262 $ 169,842 23% 2.0x 15% 1.7x
TPG | 31 Fund Performance Metrics (Cont’d) Note: Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 3/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Investor Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) Net MoM(9) Platform: Growth Growth Funds STAR 2007 $ 1,264 $ 1,259 $ 1,862 $ 64 $ 1,926 13% 1.5x 6% 1.3x Growth II 2011 2,041 2,184 4,718 622 5,340 22% 2.5x 16% 2.0x Growth III 2015 3,128 3,325 4,646 2,319 6,965 28% 2.1x 19% 1.7x Growth IV 2017 3,739 3,576 1,836 4,634 6,470 24% 1.8x 16% 1.5x Gator 2019 726 686 645 635 1,280 37% 1.9x 28% 1.6x Growth V 2020 3,558 2,577 320 3,324 3,644 34% 1.5x 21% 1.3x Growth Funds 14,456 13,607 14,027 11,598 25,625 21% 1.9x 14% 1.6x Tech Adjacencies Funds TTAD I 2018 1,574 1,497 875 1,851 2,726 33% 1.8x 26% 1.6x TTAD II 2021 3,198 1,595 — 1,664 1,664 6% 1.0x (2%) 1.0x Tech Adjacencies Funds 4,772 3,092 875 3,515 4,390 30% 1.5x 23% 1.3x TDM 2017 1,326 443 — 1,051 1,051 26% 2.4x 21% 2.0x LSI 2023 148 8 — 8 8 NM NM NM NM Platform: Growth (Excl- Legacy(15)) 20,702 17,150 14,902 16,172 31,074 21% 1.9x 15% 1.6x Legacy Funds Biotech III 2008 510 468 995 345 1,340 16% 2.9x 12% 2.3x Biotech IV 2012 106 99 121 3 124 7% 1.3x 2% 1.1x Biotech V 2016 88 81 27 48 75 (2%) 0.9x (6%) 0.8x ART 2013 258 241 35 174 209 (2%) 0.9x (6%) 0.7x Platform: Growth 21,664 18,039 16,080 16,742 32,822 20% 1.9x 14% 1.6x Platform: Impact The Rise Funds Rise I 2017 2,106 1,955 1,283 2,469 3,752 23% 1.9x 15% 1.6x Rise II 2020 2,176 1,895 99 2,542 2,641 34% 1.4x 20% 1.3x Rise III 2022 2,146 451 — 465 465 NM NM NM NM The Rise Funds 6,428 4,301 1,382 5,476 6,858 25% 1.7x 16% 1.4x TSI 2018 333 133 368 — 368 35% 2.8x 25% 2.1x Evercare 2019 621 419 23 461 484 4% 1.2x (1%) 1.0x Rise Climate 2021 7,268 2,877 54 3,556 3,610 98% 1.4x 39% 1.2x TPG NEXT(19) 2022 510 — — — — NM NM NM NM Platform: Impact $ 15,160 $ 7,730 $ 1,827 $ 9,493 $ 11,320 26% 1.6x 16% 1.3x
TPG | 32 Fund Performance Metrics (Cont’d) Note: Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 3/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Investor Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) Net MoM(9) Platform: Real Estate TPG Real Estate Partners DASA RE 2012 $ 1,078 $ 576 $ 1,069 $ — $ 1,069 21% 1.9x 15% 1.6x TREP II 2014 2,065 2,213 3,193 370 3,563 28% 1.7x 19% 1.5x TREP III 2018 3,722 4,084 2,362 2,902 5,264 20% 1.4x 14% 1.3x TREP IV 2022 6,820 561 14 548 562 (10%) 1.0x (73%) 0.7x TPG Real Estate Partners 13,685 7,434 6,638 3,820 10,458 23% 1.5x 15% 1.3x TRTX 2014 1,916 (14) NM NM NM NM NM NM NM NM TAC+ 2021 1,797 915 88 873 961 4% 1.0x 1% 1.0x Platform: Real Estate 17,398 8,349 6,726 4,693 11,419 23% 1.5x 15% 1.3x Platform: Market Solutions NewQuest Funds NewQuest I(18) 2011 390 291 767 — 767 48% 3.2x 37% 2.3x NewQuest II(18) 2013 310 342 571 160 731 25% 2.2x 19% 1.8x NewQuest III(18) 2016 541 523 374 530 904 16% 1.7x 10% 1.4x NewQuest IV(18) 2020 1,000 795 115 1,014 1,129 36% 1.4x 20% 1.2x NewQuest V(18) 2022 378 51 — 50 50 NM NM NM NM NewQuest Funds 2,619 2,002 1,827 1,754 3,581 37% 1.9x 25% 1.5x TPEP Long/Short NM NM NM NM 2,112 NM NM (13) NM NM (13) NM TPEP Long Only NM NM NM NM 1,700 NM NM (13) NM NM (13) NM TSCF 2021 609 208 6 199 205 (1%) 1.0x (2%) 1.0x TGS(18) 2022 512 97 — 111 111 NM NM NM NM TPG TIGER(18) 2022 300 15 — 12 12 NM NM NM NM TPG TIGER 2(19) 2022 130 — — — — NM NM NM NM Platform: Market Solutions(12) 4,170 2,322 1,833 5,888 3,909 37% 1.8x 24% 1.5x Discontinued Funds(16) 5,870 4,103 5,303 — 5,303 7% 1.3x 3% 1.1x Total (excl-Legacy(15) and Discontinued Funds(16)) 160,708 123,359 157,649 73,344 227,181 23% 1.9x 15% 1.6x Total $ 167,843 $ 128,557 $ 164,349 $ 74,078 $ 234,615 22% 1.9x 14% 1.6x
TPG | 33 Fund Performance Metrics Notes 1) Vintage Year, with respect to an investment or group of investments, as applicable, represents the year such investment, or the first investment in such a group, was initially consummated by the fund. For follow-on investments, Vintage Year represents the year that the fund’s first investment in the relevant company was initially consummated. Vintage Year, with respect to a fund, represents the year in which the fund consummated its first investment (or, if earlier, received its first capital contributions from investors). We adopted this standard for fund Vintage Year to better align with current market and investor benchmarking practices. For consistency with prior reporting, however, the Vintage Year classification of any fund that held its initial closing before 2018 remains unchanged and represents the year of such fund’s initial closing. 2) Capital Committed represents the amount of inception to date commitments a particular fund has received. 3) Capital Invested, with respect to an investment or group of investments, as applicable, represents cash outlays by the fund for such investment or investments (whether funded through investor capital contributions or borrowing under the fund’s credit facility), including capitalized expenses and unrealized bridge loans allocated to such investment or investments. Capital Invested may be reduced after the date of initial investment as a result of sell-downs. This does not include proceeds eligible for recycling under fund limited partnership agreements. Capital Invested does not include interest expense on borrowing under the fund’s credit facility. 4) Realized Value, with respect to an investment or group of investments, as applicable, represents total cash received or earned by the fund in respect of such investment or investments through the quarter end, including all interest, dividends and other proceeds. Receipts are recognized when cash proceeds are received or earned. Proceeds from an investment that is subject to pending disposition are not included in Realized Value and remain in Unrealized Value until the disposition has been completed and cash has been received. Similarly, any proceeds from an investment that is pending liquidation, or a similar event are not included in Realized Value until the liquidation or similar event has been completed. In addition, monitoring, transaction and other fees are not included in Realized Value but are applied to offset management fees to the extent provided in the fund’s partnership agreement. 5) Unrealized Value, with respect to an investment in a publicly traded security, is based on the closing market price of the security as of the quarter end on the principal exchange on which the security trades, as adjusted by the general partner for any restrictions on disposition. Unrealized Value, with respect to an investment that is not a publicly traded security, represents the general partner’s estimate of the unrealized fair value of the fund’s investment, assuming a reasonable period of time for liquidation of the investment, and taking into consideration the financial condition and operating results of the portfolio company, the nature of the investment, applicable restrictions on marketability, market conditions, foreign currency exposures and other factors the general partner may deem appropriate. Where applicable, such estimate has been adjusted from cost to reflect (i) company performance relative to internal performance markers and the performance of comparable companies; (ii) market performance of comparable companies; and (iii) recent, pending or proposed transactions involving us, such as recapitalizations, initial public offerings or mergers and acquisitions. Given the nature of private investments, valuations necessarily entail a degree of uncertainty and/or subjectivity. There can be no assurance that expected transactions will actually occur or that performance markers will be achieved, and therefore actual value may differ from such estimated value and these differences may be material and adverse. Except as otherwise noted, valuations are as of the quarter end. 6) Total Value, with respect to an investment or group of investments, as applicable, is the sum of Realized Value and Unrealized Value of such investment or investments. 7) Gross IRR and Gross MoM are calculated by adjusting Net IRR and Investor Net MoM to generally approximate investor performance metrics excluding management fees, fund expenses (other than interest expense and other fees arising from amounts borrowed under the fund’s credit facility to fund investments) and performance allocations. With respect to interest expense and other fees arising from amounts borrowed under the fund’s credit facility to fund investments, we have assumed that investor capital contributions were made in respect thereof as of the midpoint of each relevant quarter in which such amounts were incurred. We have further assumed that distributions to investors occurred in the middle of the month in which the related proceeds were received by the fund. Like the Net IRR, Gross IRR and Gross MoM (i) do not reflect the effect of taxes borne, or to be borne, by investors and (ii) excludes amounts attributable to the fund’s general partner, its affiliated entities and “friends of the firm” entities that generally pay no or reduced management fees and performance allocations. Such Gross IRR and Gross MoM represent an average of returns for all included investors and does not necessarily reflect the actual return of any particular investor. Gross IRR and Gross MoM are an approximation calculated by adjusting historical data using estimates and assumptions that we believe are appropriate for the relevant fund, but that inherently involve significant judgment. For funds that engaged in de minimis or no fund-level borrowing, Gross IRR is the discount rate at which (i) the present value of all Capital Invested in an investment or investments is equal to (ii) the present value of all realized and unrealized returns from such investment or investments. In this scenario, Gross IRR, with respect to an investment or investments, has been calculated based on the time that capital was invested by the fund in such investment or investments and that distributions were received by the fund in respect of such investment or investments, regardless of when capital was contributed to or distributed from the fund. Gross IRR does not reflect the effect of management fees, fund expenses, performance allocations or taxes borne, or to be borne, borne, by investors in the fund and would be lower if it did. For funds that engaged in de minimis or no fund-level borrowing, Gross MoM represents the multiple-of-money on capital invested by the fund for an investment or investments and is calculated as Total Value divided by Capital Invested (i.e., cash outlays by the fund for such investment or investments, whether funded through investor capital contributions or borrowing under the fund’s credit facility). Gross MoM is calculated on a gross basis and does not reflect the effect of management fees, fund expenses, performance allocations or taxes borne, or to be borne, by investors in the fund, and would be lower if it did.
TPG | 34 Fund Performance Metrics Notes (Cont’d) 8) Net IRR represents the compound annualized return rate (i.e., the implied discount rate) of a fund, which is calculated using investor cash flows in the fund, including cash received from capital called from investors, cash distributed to investors and the investors’ ending capital balances as of the quarter end. Net IRR is the discount rate at which (i) the present value of all capital contributed by investors to the fund (which excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital) is equal to (ii) the present value of all cash distributed to investors and the investors’ ending capital balances. Net IRR reflects the impact of management fees, fund expenses (including interest expense arising from amounts borrowed under the fund’s credit facility) and performance allocations, but does not reflect the effect of taxes borne, or to be borne, by investors. The Net IRR calculation assumes that investor contributions and distributions occurred in the middle of the month in which they were made. The Net IRR calculation excludes amounts attributable to the general partner, its affiliated entities and “friends of the firm” entities that generally pay no or reduced management fees and performance allocations. Net IRR represents an average return for all included investors, including those that pay reduced management fees and/or carried interest, and does not necessarily reflect the actual return of any particular investor. An actual investor that paid management fees and/or carried interest at rates higher than the average would have a lower individual Net IRR. In addition, management fees, fund expenses and carried interest differ from fund to fund, and therefore the impact of such amounts in a particular fund should not be assumed to reflect the impact such amounts would have on any other fund, including in respect of any fund in which a prospective investor is considering an investment. Net IRR for a platform does not include the cash flows for funds that are not currently presenting a Net IRR to their investors. 9) Investor Net MoM, with respect to a fund, represents the multiple-of-money on contributions to the fund by investors. Investor Net MoM is calculated as the sum of cash distributed to investors and the investors’ ending capital balances as of the quarter end, divided by the amount of capital contributed to the fund by investors (which amount excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital). Investor Net MoM reflects the impact of management fees, fund expenses (including interest expense arising from amounts borrowed under the fund’s credit facility) and performance allocations, but does not reflect the effect of taxes borne, or to be borne, by investors. The Investor Net MoM calculation excludes amounts attributable to the fund’s general partner, its affiliated entities and “friends of the firm” entities that generally pay no or reduced management fees and performance allocations. Investor Net MoM represents an average multiple-of-money for all included investors and does not necessarily reflect the actual return of any particular investor. An actual investor that paid management fees and/or carried interest at rates higher than the average would have a lower individual net MoM. In addition, management fees, fund expenses and carried interest differ from fund to fund, and therefore the impact of such amounts in a particular fund should not be assumed to reflect the impact such amounts would have on any other fund, including in respect of any fund in which a prospective investor is considering an investment. 10) “NM” signifies that the relevant data would not be meaningful. Performance metrics are generally deemed “NM” for an investment or group of investments when, among other reasons, a fund is in its initial period of operation, or the holding period of the investment or investments is in its initial period of holding, which in each case we typically determine to mean up to twelve months, or the investment or investments do not have a significant cost basis. IRR metrics are generally deemed “NM” prior to the fund calling capital for the applicable investment(s). 11) Amounts shown are in US dollars. When an investment is made in another currency, (i) Capital Invested is calculated using the exchange rate at the time of the investment, (ii) Unrealized Value is calculated using the exchange rate at the quarter end and (iii) Realized Value reflects actual US dollar proceeds to the fund. A fund may enter into foreign currency hedges in connection with an investment made in a currency other than US dollars. Capital Invested with respect to such investment includes the cost of establishing foreign currency hedges. For hedges entered into to facilitate payment of the purchase price for an investment, gains or losses on such hedges are applied, respectively, to reduce or increase Capital Invested with respect to such investment. Thereafter during the life of such investment, (i) Capital Invested includes any inception-to-date net realized losses on such hedges, (ii) Unrealized Value includes the unrealized fair value of such hedges as estimated by the general partner and (iii) Realized Value includes any inception-to-date net realized gain on such hedges. For hedges entered into in anticipation of receipt of exit proceeds, (i) losses on such hedges are first applied to offset exit proceeds, with any remaining losses applied to increase Capital Invested and (ii) gains on such hedges are first applied to reverse any inception-to-date net realized losses that were previously included in Capital Invested, with any remaining gains applied to increase Realized Value. Where a foreign currency hedge is implemented as part of the investment structure below the fund, such hedge is similarly reflected in Capital Invested and Realized Value to the extent that there are corresponding cash outflows from and inflows to the fund in respect of such hedge, and otherwise is included in Unrealized Value. 12) Our special purpose acquisition companies (“SPACs”) which include Pace Holdings Corp., TPG Pace Holdings Corp., TPG Pace Tech Opportunities Corp., TPG Pace Beneficial Finance Corp., TPG Pace Energy Holdings Corp., TPG Pace Solutions Corp., TPG Pace Beneficial II Corp. and AfterNext HealthTech Acquisition Corp. within the Market Solutions platform are not reflected. Gross IRR, Gross MoM and Net IRR are not meaningful for SPAC products as they are designed to identify an investment and merge to become a public company.
TPG | 35 Fund Performance Metrics Notes (Cont’d) 13) As of March 31, 2023, TPEP Long/Short had estimated inception-to-date gross returns of 153% and net returns of 113%. These performance estimates represent the composite performance of TPG Public Equity Partners, LP and TPG Public Equity Partners Master Fund, L.P., adjusted as described below. The performance estimates are based on an investment in TPG Public Equity Partners, LP made on September 1, 2013, the date of TPEP’s inception, with the performance estimates for the period from January 1, 2016 to present being based on an investment in TPG Public Equity Partners Master Fund, L.P. made through TPG Public Equity Partners-A, L.P., the “onshore feeder.” Gross performance figures (i) are presented after any investment-related expenses, net interest, other expenses and the reinvestment of dividends; (ii) include any gains or losses from “new issue” securities; and (iii) are adjusted for illustration purposes to reflect the reduction of a hypothetical 1.5% annual management fee. Net performance assumes a 20% performance allocation. Performance results for a particular investor may vary from the performance stated as a result of, among other things, the timing of its investment(s) in TPEP, different performance allocation terms, different management fees, the feeder through which the investor invests and the investor’s eligibility to participate in gains and losses from “new issue” securities. Unrealized Value represents net asset value before redemptions. As of March 31, 2023, TPEP Long Only had estimated inception-to-date gross returns of 24% and net returns of 24%. These performance estimates represent performance for TPEP Long Only and are based on an investment in TPEP Long Only made on May 1, 2019, the date of TPEP Long Only’s inception, through TPG Public Equity Partners Long Opportunities-A, L.P., the “onshore feeder.” Gross performance figures are presented after any investment-related expenses, a 1% annual management fee, net interest, other expenses and the reinvestment of dividends, and include any gains or losses from “new issue” securities. Net performance assumes a 20% performance allocation, with the performance allocation only received upon outperforming the relevant benchmark. Performance results for a particular investor may vary from the performance stated as a result of, among other things, the timing of its investment(s) in TPEP Long Only, different performance allocation terms, different management fees, the feeder through which the investor invests and the investor’s eligibility to participate in gains and losses from “new issue” securities. Unrealized Value represents net asset value before redemptions. 14) Capital Committed for TRTX includes $1,201 million of private capital raised prior to TRTX’s initial public offering in July 2017 and $716 million issued during and subsequent to TRTX’s initial public offering. 15) Legacy funds represent funds whose strategies are not expected to have successor funds but that have not yet been substantially wound down. 16) Discontinued funds represent legacy funds that have substantially been wound down or are fully liquidated. The following TPG funds are considered discontinued: Latin America, Aqua I, Aqua II, Ventures, Biotech I, Biotech II, TPG TFP, TAC 2007 and DASA PE. 17) Total TPG track record amounts do not include results from RMB - Shanghai and RMB - Chongqing or China Ventures, a joint venture partnership. 18) Unless otherwise specified, the fund performance information presented above for certain funds is, due to the nature of their strategy, as of December 31, 2022. Accordingly, the fund performance information presented above for the funds does not reflect any fund activity for the quarter ended March 31, 2023 and therefore does not cover the same period presented for other funds. Any activity occurring during the quarter ended March 31, 2023 will be reflected in the performance information presented in future reporting. 19) Certain funds recorded capital commitments prior to March 31, 2023, but were not activated or had not yet made their first investment. Therefore the only activity reflected in the track record with respect to these funds was the capital commitments.
TPG | 36 GAAP Statements of Operations Expanded (Unaudited) ($ in thousands) 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 Revenues Fees and other $ 273,005 $ 289,955 $ 333,496 $ 350,179 $ 311,471 Capital allocation-based income 837,705 (398,237) 227,628 89,156 331,674 Total revenues 1,110,710 (108,282) 561,124 439,335 643,145 Expenses Compensation and benefits Cash-based compensation and benefits 116,359 115,639 116,753 124,945 120,451 Equity-based compensation 185,911 145,140 143,149 153,514 157,293 Performance allocation compensation 523,138 (298,026) 149,495 41,949 221,341 Total compensation and benefits 825,408 (37,247) 409,397 320,408 499,085 General, administrative and other 102,264 77,671 95,533 93,447 104,873 Depreciation and amortization 8,699 8,558 7,372 8,361 8,222 Interest expense 4,638 4,731 5,737 6,506 7,418 Expenses of consolidated Public SPACs: Other 1,523 457 567 769 519 Total expenses 942,532 54,170 518,606 429,491 620,117 Investment income Income from investments: Net gains from investment activities 6,643 (99,395) 1,907 (19,286) 14,816 Interest, dividends and other 204 782 2,407 5,775 7,971 Investment income of consolidated Public SPACs: Unrealized gains on derivative liabilities 2,657 5,823 3,235 667 (750) Interest, dividends and other 126 843 3,571 2,201 2,712 Total investment income 9,630 (91,947) 11,120 (10,643) 24,749 Income before income taxes 177,808 (254,399) 53,638 (799) 47,777 Income tax expense 15,004 8,098 432 8,949 12,103 Net income 162,804 (262,497) 53,206 (9,748) 35,674 Less: Net income attributable to redeemable equity in Public SPACs prior to IPO (517) — — — — Net income attributable to other non-controlling interests prior to IPO 966 — — — — Net income attributable to TPG Group Holdings prior to IPO 5,256 — — — — Net income attributable to redeemable equity in Public SPACs 1,823 4,058 7,322 1,962 1,529 Net income attributable to non-controlling interests in TPG Operating Group (4,912) (128,869) (6,898) (40,145) (25,492) Net income attributable to other non-controlling interests 118,904 (127,827) 15,422 4,794 34,582 Net income attributable to TPG Inc. subsequent to IPO $ 41,284 $ (9,859) $ 37,360 $ 23,641 $ 25,055
TPG | 37 Non-GAAP Financial Measures Expanded Note: Due to the Reorganization in 1Q’22, comparability of prior periods may be limited. See the Reconciliations and Disclosures section of this presentation for a full reconciliation between GAAP and Non-GAAP Financial Measures. ($ in thousands) 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 1Q'23 LTM Fee-Related Revenues Management Fees $ 202,731 $ 222,686 $ 254,510 $ 249,933 $ 247,998 $ 975,127 Transaction, monitoring and other fees, net 26,756 21,168 14,909 46,245 4,672 86,994 Other Income 11,045 12,018 12,874 11,131 12,783 48,806 Fee-Related Revenues 240,532 255,872 282,293 307,308 265,453 1,110,926 Fee-Related Expenses Compensation and benefits, net 98,187 95,547 96,758 102,476 100,155 394,936 Operating expenses, net 50,362 58,522 64,324 65,981 66,014 254,841 Fee-Related Expenses 148,549 154,069 161,082 168,457 166,169 649,777 Fee-Related Earnings 91,983 101,803 121,211 138,853 99,284 461,151 Realized performance allocations, net 122,192 60,175 4,977 95,039 5,025 165,216 Realized investment income and other, net 7,293 15,443 (336) 19,638 (5,175) 29,570 Depreciation expense (1,571) (1,468) (280) (1,270) (1,131) (4,149) Interest expense, net (4,431) (4,255) (4,077) (1,033) (1,033) (10,398) Distributable Earnings 215,466 171,698 121,495 251,227 96,970 641,390 Income taxes (16,433) (9,831) (8,678) (24,681) (9,128) (52,318) After-Tax Distributable Earnings $ 199,033 $ 161,867 $ 112,817 $ 226,546 $ 87,842 $ 589,072
Reconciliations and Disclosures
TPG | 39 1Q'22 LTM Pro Forma Non-GAAP Financial Measures Walk ($ in thousands) Actual Non-GAAP 1Q'22 LTM Pro Forma Adjustments Pro Forma Non-GAAP 1Q'22 LTM Fee-Related Revenues Management Fees $ 766,867 $ — $ 766,867 Transaction, monitoring and other fees, net 102,675 — 102,675 Other Income 45,117 5,852 50,969 (1) Fee-Related Revenues 914,659 5,852 920,511 Fee-Related Expenses Compensation and benefits, net 499,898 (108,509) 391,389 (2) Operating expenses, net 177,827 — 177,827 Fee-Related Expenses 677,725 (108,509) 569,216 Fee-Related Earnings 236,934 114,361 351,295 Realized performance allocations, net 1,055,674 (734,378) 321,296 (2), (3) Realized investment income and other, net 92,018 (20,580) 71,438 (4) Depreciation expense (6,990) — (6,990) Interest expense, net (15,721) (2,994) (18,715) (5) Distributable Earnings 1,361,914 (643,591) 718,323 Income taxes (22,434) (23,621) (46,055) (6) After-Tax Distributable Earnings $ 1,339,480 $ (667,212) $ 672,268 1) The difference in other income between non-GAAP and pro forma non-GAAP financial measures is attributable to: (i) removing the other income associated with the other investments that were transferred to RemainCo and (ii) an administrative services fee that we receive for managing the Excluded Assets transferred to RemainCo that are not part of the TPG Operating Group. The fee is based on 1% of the net asset value of RemainCo. 2) This adjustment reflects the expected reduction of our cash-based bonuses relative to what we historically paid to our partners and professionals within compensation and benefits, net. Through the Reorganization, we have increased certain of our people’s share of performance allocations associated with the Specified Company Assets from approximately 50% to between 65% and 70%. 3) Realized performance allocations, net only include the amounts the TPG Operating Group is entitled to after gross realized performance allocations has been reduced by realized performance allocation compensation and non-controlling interests. Following the Reorganization, the TPG Operating Group receives approximately 20% of the future performance allocations associated with the general partner entities that we retained an economic interest in. This adjustment to our sharing percentage was made to allow us to reduce amounts we would expect to pay out as discretionary cash-based bonuses in the future paid to our partners. 4) The difference in realized investment income and other, net is related to the transfer to RemainCo of certain other investments that make up the Excluded Assets. The TPG Operating Group retained its interests in our strategic investments in NewQuest, Harlem Capital Partners, VamosVentures and LandSpire Group. 5) This difference relates to additional interest expense from new financing the TPG Operating Group used to declare a distribution of $200 million to our controlling and non-controlling interest holders prior to the Reorganization and the IPO. The distribution was made with $200 million proceeds from the senior unsecured term loan issuance. The Senior Unsecured Term Loan carries an interest rate of LIBOR plus 1.00% and matures in December 2024. 6) The difference in income tax expense is attributable to the corporate conversion. The income tax expense adjustment reflects TPG Inc.’s share of pro forma pre-tax distributable earnings, which equals 25.6%, multiplied by TPG Inc.’s effective tax rate of 23.0%.
TPG | 40 GAAP to Non-GAAP Financial Measures Reconciliation ($ in thousands) 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 1Q'23 LTM GAAP Revenue $ 1,110,710 $ (108,282) $ 561,124 $ 439,335 $ 643,145 $ 1,535,322 Capital-allocation Income (837,705) 398,237 (227,628) (89,156) (331,674) (250,221) Expense Reimbursements (32,677) (36,022) (54,219) (43,172) (44,249) (177,662) Investment income and other 204 1,939 3,016 301 (1,769) 3,487 Fee-Related Revenue $ 240,532 $ 255,872 $ 282,293 $ 307,308 $ 265,453 $ 1,110,926 GAAP Expense $ 942,532 $ 54,170 $ 518,606 $ 429,491 $ 620,117 $ 1,622,384 Depreciation and amortization expense (8,699) (8,558) (7,372) (8,361) (8,222) (32,513) Interest expense (4,638) (4,731) (5,737) (6,506) (7,418) (24,392) Expense related to consolidated Public SPACs (1,523) (457) (567) (769) (519) (2,312) Expense Reimbursements (32,677) (36,022) (54,219) (43,172) (44,249) (177,662) Performance allocation compensation (523,138) 298,026 (149,495) (41,949) (221,341) (114,759) Equity based compensation (185,911) (145,140) (143,149) (153,514) (157,293) (599,096) Non-core expenses and other (37,397) (3,219) 3,015 (6,763) (14,906) (21,873) Fee-Related Expenses $ 148,549 $ 154,069 $ 161,082 $ 168,457 $ 166,169 $ 649,777 ($ in thousands) 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 1Q'23 LTM Net Income $ 162,804 $ (262,497) $ 53,206 $ (9,748) $ 35,674 $ (183,365) Net (income) attributable to redeemable interests in Public SPACs (1,306) (4,058) (7,322) (1,962) (1,529) (14,871) Net (income) attributable to other non-controlling interests (118,904) 127,827 (15,422) (4,794) (34,582) 73,029 Amortization expense 3,272 3,083 2,949 4,849 3,538 14,419 Equity-based compensation 190,462 146,023 144,159 154,115 155,706 600,003 Unrealized performance allocations, net (35,949) 119,222 (48,067) 82,719 (66,475) 87,399 Unrealized investment income (2,591) 31,201 (2,116) 22,301 (9,350) 42,036 Unrealized (gain) on derivatives (685) (37) (338) (59) 66 (368) Income taxes (1,301) (1,848) (7,543) (15,762) 2,988 (22,165) Non-recurring and other 3,231 2,951 (6,689) (5,113) 1,806 (7,045) After-tax Distributable Earnings 199,033 161,867 112,817 226,546 87,842 589,072 Income taxes 16,433 9,831 8,678 24,681 9,128 52,318 Distributable Earnings 215,466 171,698 121,495 251,227 96,970 641,390 Realized performance allocations, net (122,192) (60,175) (4,977) (95,039) (5,025) (165,216) Realized investment income and other, net (7,293) (15,443) 336 (19,638) 5,175 (29,570) Depreciation expense 1,571 1,468 280 1,270 1,131 4,149 Interest expense, net 4,431 4,255 4,077 1,033 1,033 10,398 Fee-Related Earnings $ 91,983 $ 101,803 $ 121,211 $ 138,853 $ 99,284 $ 461,151
TPG | 41 GAAP to Non-GAAP Balance Sheet Reconciliation ($ in thousands) 4Q'22 1Q'23 Total GAAP Assets $ 7,941,738 $ 7,967,322 Impact of consolidated Public SPACs Cash and cash equivalents (5,097) (4,375) Assets held in Trust Accounts (653,635) (656,347) Due from affiliates (45) (45) Other assets (412) (342) Subtotal for impact of consolidated Public SPACs (659,189) (661,109) Impact of other consolidated entities Cash and cash equivalents (415,797) (313,337) Due from affiliates (211,097) (194,592) Investments (4,110,535) (4,224,589) Other assets (134,505) (173,254) Subtotal for impact of other consolidated entities (4,871,934) (4,905,772) Reclassification adjustments Due from affiliates 8,458 1,450 Investments (1,219,333) (1,306,252) Accrued performance allocations 642,519 708,868 Investments in funds 576,814 597,384 Other assets 81,354 68,586 Subtotal for reclassification adjustments 89,812 70,036 Total Book Assets $ 2,500,427 $ 2,470,477 ($ in thousands) 4Q'22 1Q'23 Total GAAP Liabilities $ 4,202,232 $ 4,309,531 Impact of consolidated Public SPACs Accounts payable and accrued expenses (236) (262) Derivative liabilities of Public SPACs (667) (1,417) Deferred underwriting (22,750) (22,750) Subtotal for impact of consolidated Public SPACs (23,653) (24,429) Impact of other consolidated entities Accounts payable and accrued expenses (90,685) (127,262) Due to affiliates (134,562) (226,855) Accrued performance allocation compensation (3,269,889) (3,225,492) Other liabilities (206,276) (202,008) Subtotal for impact of other consolidated entities (3,701,412) (3,781,617) Reclassification adjustments Accounts payable and accrued expenses 40,698 50,445 Due to affiliates (5,301) (5,960) Other liabilities (19,815) (30,303) Subtotal for reclassification adjustments 15,582 14,182 Total Book Liabilities $ 492,749 $ 517,667
TPG | 42 Additional Information Dividend Policy Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of distributable earnings attributable to the TPG Operating Group, subject to adjustment as determined by the Executive Committee of our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations. Although we expect to pay at least 85% of our DE as a dividend, the percentage of our DE paid out as a dividend could fall below that target minimum. All of the foregoing is subject to the further qualification that the declaration and payment of any dividends are at the sole discretion of the Executive Committee prior to the Sunset and the Executive Committee may change our dividend policy at any time, including, without limitation, to reduce such dividends or even to eliminate such dividends entirely. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of the Executive Committee after taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on our ability to pay dividends. Certain of our existing credit facilities include, and any financing arrangement that we enter into in the future may include restrictive covenants that limit our ability to pay dividends. In addition, the TPG Operating Group is generally prohibited under Delaware law from making a distribution to a limited partner to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the TPG Operating Group (with certain exceptions) exceed the fair value of its assets. Subsidiaries of the TPG Operating Group are generally subject to similar legal limitations on their ability to make distributions to the TPG Operating Group. Non-GAAP Financial Measures In this presentation, we disclose non-GAAP financial measures, including Distributable Earnings (“DE”), After-tax DE, Fee-Related Earnings (“FRE”), Fee-Related Revenues (“FRR”), and Fee- Related Expenses. These measures are not financial measures under GAAP and should not be considered as substitutes for net income, revenues or total expenses, and they may not be comparable to similarly titled measures reported by other companies. These measures should be considered in addition to GAAP measures. We use these measures to assess the core operating performance of our business, and further definitions can be found on the following pages.
TPG | 43 Definitions After-tax Distributable Earnings (“After-tax DE”) is a non-GAAP performance measure of our distributable earnings after reflecting the impact of income taxes. We use it to assess how income tax expense affects amounts available to be distributed to our Class A common stock holders and Common Unit holders. After-tax DE differs from GAAP net income computed in accordance with GAAP in that it does not include the items described in the definition of DE herein; however, unlike DE it does reflect the impact of income taxes. Income taxes, for purposes of determining After-tax DE, represent the total GAAP income tax expense adjusted to include only the current tax expense (benefit) calculated on GAAP net income before income tax and includes the current payable under our Tax Receivable Agreement, which is recorded within other liabilities in our consolidated statement of financial condition. Further, the current tax expense (benefit) utilized when determining After-tax DE reflects the benefit of deductions available to the Company on certain expense items that are excluded from the underlying calculation of DE, such as equity-based compensation charges. We believe that including the amount currently payable under the Tax Receivable Agreement and utilizing the current income tax expense (benefit), as described above, when determining After-tax DE is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to shareholders. Assets Under Management (“AUM”) represents the sum of (i) fair value of the investments and financial instruments held by funds, entities, or accounts managed or advised by us, plus the capital that we are entitled to call from investors in those funds, entities, or accounts, pursuant to the terms of their respective capital commitments, net of outstanding leverage, including capital commitments to funds, entities, or accounts that have yet to commence their investment periods; (ii) the net asset value of our hedge funds and funds of hedge funds; (iii) the gross amount of assets for our mortgage REITs and collateralized fundraising vehicles; and (iv) IPO proceeds held in trust, excluding interest, as well as forward purchase agreements and proceeds associated with the private investment in public equity related to our SPACs upon the consummation of a business combination. Our definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, entities, or accounts that we manage or advise, or calculated pursuant to any regulatory definitions. AUM Not Yet Earning Fees represents the amount of capital commitments to TPG investment funds and co-investment vehicles that has not yet been invested or considered active, and as this capital is invested or activated, the fee-paying portion will be included in FAUM. AUM Subject to Fee Earning Growth represents capital commitments that can grow fees when deployed through earning new management fees (AUM Not Yet Earning Fees) or when invested from a higher rate of management fees (FAUM Subject to Step-Up). Available capital is the aggregate amount of unfunded capital commitments that partners have committed to our funds and co-invest vehicles to fund future investments, as well as IPO and forward purchase agreement proceeds associated with our Public SPACs, and private investment in public equity commitments by investors upon the consummation of a business combination associated with our Public SPACs. Available capital is reduced for investments completed using fund-level financing arrangements; however, it is not reduced for investments that we have committed to make yet remain unfunded at the reporting date. We believe this measure is useful to investors as it provides additional insight into the amount of capital that is available to our investment funds and co-investment vehicles to make future investments. Capital invested is the aggregate amount of capital invested during a given period by TPG’s investment funds, co-investment vehicles and SPACs in conjunction with the completion of a business combination. It excludes hedge fund activity. We believe this measure is useful to investors as it measures capital deployment across TPG. Capital invested includes investments made using investment financing arrangements like credit facilities, as applicable. Capital raised is the aggregate amount of capital commitments raised by TPG’s investment funds and co-investment vehicles during a given period, as well as IPO and forward purchase agreements associated with our Public SPACs and private investment in public equity upon the consummation of a business combination associated with one of our Public SPACs. We believe this measure is useful to investors as it measures access to capital across TPG and our ability to grow our management fee base. Catch-up fees, also known as out of period management fees, represent fees paid in any given period that are related to a prior period, usually due to a new limited partner coming into a fund in a subsequent close. Distributable Earnings (“DE”) is used to assess performance and amounts potentially available for distributions to partners. DE is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of net income. DE differs from GAAP net income computed in accordance with GAAP in that it does not include (i) unrealized performance allocations and related compensation and benefit expense, (ii) unrealized investment income, (iii) equity-based compensation expense, (iv) net income (loss) attributable to non-controlling interests in consolidated entities, or (v) certain non-cash items, such as contingent reserves. Distributable Earnings participating shares refers to the sum of (i) shares (Class A voting, Class A non-voting, and TPG Operating Group Common Units) and (ii) share-based payment awards with non-forfeitable rights to dividends that benefit from the distribution of profits from TPG Operating Group at the end of any given period. This does not include shares or restricted stock units (i) whose dividends accrue to be paid on vesting or (ii) which do not participate in dividends. Excluded Assets refers to the assets and economic entitlements transferred to RemainCo listed in Schedule A to the master contribution agreement entered into in connection with the Reorganization (as defined herein), which primarily include (i) minority interests in certain sponsors unaffiliated with TPG, (ii) the right to certain performance allocations in TPG funds, (iii) certain co-invest interests and (iv) cash.
TPG | 44 Definitions (Cont’d) FAUM Subject to Step-Up represents capital raised within certain funds where the management fee rate increases once capital is invested. Subject to certain limitations, limited partners in these funds pay a lower fee on committed and undrawn capital. As capital is drawn down for investments, the fees paid on that capital increases. FAUM Subject to Step-Up is included within FAUM. Fee-Related Earnings (“FRE”) is a supplemental performance measure and is used to evaluate our business and make resource deployment and other operational decisions. FRE differs from net income computed in accordance with GAAP in that it adjusts for the items included in the calculation of DE and also adjusts to exclude (i) realized performance allocations and related compensation expense, (ii) realized investment income from investments and financial instruments, (iii) net interest (interest expense less interest income), (iv) depreciation, (v) amortization and (vi) certain non-core income and expenses. We use FRE to measure the ability of our business to cover compensation and operating expenses from fee revenues other than capital allocation-based income. The use of FRE without consideration of the related GAAP measures is not adequate due to the adjustments described herein. Fee-Related Earnings margin is defined as Fee-Related Earnings divided by Fee-Related Revenues. Fee-Related Expenses differs from expenses computed in accordance with GAAP in that it is net of certain reimbursement arrangements. Fee-related expenses is used in management’s review of the business. Fee-Related Revenues (“FRR”) is comprised of (i) management fees, (ii) transaction, monitoring and other fees, net, and (iii) other income. Fee-related revenue differs from revenue computed in accordance with GAAP in that it excludes certain reimbursement expense arrangements. Fee earning AUM (“FAUM”) represents only the AUM from which we are entitled to receive management fees. FAUM is the sum of all the individual fee bases that are used to calculate our management fees and differs from AUM in the following respects: (i) assets and commitments from which we are not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which we are entitled to receive only performance allocations or are otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in our private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are generally not impacted by changes in the fair value of underlying investments. We believe this measure is useful to investors as it provides additional insight into the capital base upon which we earn management fees. Our definition of FAUM is not based on any definition of AUM or FAUM that is set forth in the agreements governing the investment funds and products that we manage. Net accrued performance allocations represents both unrealized and undistributed performance allocations resulting from our general partner interests in our TPG funds. We believe this measure is useful to investors as it provides additional insight into the accrued performance allocations to which the TPG Operating Group Common Unit holders are expected to receive. Non-GAAP Financial Measures represent financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP. We use these measures to assess the core operating performance of our business. Operating profit margin is defined as GAAP net income divided by GAAP total revenue. Realizations represent the aggregate investment proceeds generated by our TPG investment funds and co-investment vehicles and Public SPACs in conjunction with the completion of a business combination. We believe this measure is useful to investors as it drives investment gains and performance allocations. RemainCo refers to, collectively, Tarrant RemainCo I, L.P., a Delaware limited partnership, Tarrant RemainCo II, L.P., a Delaware limited partnership, and Tarrant RemainCo III, L.P., a Delaware limited partnership, which owns the Excluded Assets, and Tarrant RemainCo GP LLC, a Delaware limited liability company serving as their general partner. TPG Operating Group refers (i) for periods prior to giving effect to the Reorganization, to the TPG Operating Group partnerships and their respective consolidated subsidiaries and (ii) for periods beginning after giving effect to the Reorganization, (A) to the TPG Operating Group partnerships and their respective consolidated subsidiaries and (B) not to RemainCo. TPG Operating Group partnerships refers to TPG Operating Group I, L.P., a Delaware limited partnership formerly named TPG Holdings I, L.P., TPG Operating Group II, L.P., a Delaware limited partnership formerly named TPG Holdings II, L.P., and TPG Operating Group III, L.P., a Delaware limited partnership formerly named TPG Holdings III, L.P. TPG Partner Holdings refers to TPG Partner Holdings, L.P., a Delaware limited partnership, which is a TPG Partner Vehicle that indirectly owns substantially all of the economic interests of TPG Group Holdings, a TPG Partner Vehicle. Value creation, with respect to an investment or group of investments, represents the appreciation or depreciation of value during a given measurement period, with the numerator being the total change in value reduced by capital invested during the measurement period, and the denominator being the sum of (i) the unrealized value at the beginning of the measurement period plus (ii) capital invested in follow-on investments made during the measurement period plus (iii) capital invested in new investments made during the measurement period if the new investment had a change in value.