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| Additionally, TPG AG Real Estate had $7.3 billion of dry powder at year-end, with dedicated funds in the U.S., Europe and Asia and a global network of approximately 200 operating partners, TPG AG real estate is well positioned to deploy its flexible and opportunistic capital across a range of attractive opportunities |
| So, the portfolio is in great shape and the opportunity set is even better |
| So we feel like that the dynamics in terms of the way that's setting up is very positive for us |
| First, scaling our existing strategies and in particular, completing several important fundraises, second, continuing our strong track record of driving organic growth and innovation; and third, expanding our business through targeted acquisitions |
| We're excited about the progress we've made in all three of these areas |
| In Credit Solutions, if you look across our business, I think I said in my comments that our performance was very strong, in excess of 300 basis point premium, over where the indices ended up |
| I think that, as I mentioned or alluded to, performance has been across our Credit strategies has been very, very good |
| This is a direct result of TPG's differentiated investment strategies, outstanding performance track record and strong and growing client relationships |
| Obviously, AG Credit performance was quite good |
| Going forward, we continue to think we're well positioned to show the market differentiated opportunities, and we should be able to continue to generate the Private Equity target returns that we've been focused on in this fund |
| We believe these new client relationships create significant potential for embedded growth in successor funds, as well as the opportunity to expand engagement across additional TPG strategies and products |
| And so far, the performance, I think, as you pointed out, has been strong |
| Second, we continue to demonstrate our ability to grow organically by launching and scaling products in parts of the market, where we have distinct competitive advantages |
| The UAE selection of TPG as its first private equity partner is a testament to the strong brand and leadership position, we've built in the Climate and Impact space |
| So performance in Rise Climate is pretty impressive today with an IRR of 27% |
| We'll continue to build those businesses and expand them as we're able to scale them with respect to more capital, but we feel pretty good about the tools that we have |
| And as far as the product lines, particularly on the Credit side, we feel we feel great about the mix of product capability that we have in AG |
| So, that, I would say, is one part of it that continues to grow and continues to be a great opportunity for us, and it's also a global opportunity |
| They also benefited from above expected core fundraising but also strong transaction fees |
| The most near term is the ability to generate incremental fee revenue from the integration of our Capital Markets business into TPG AG Credit, which is already well underway |
| So we're feeling pretty good about what we expect to do in the Wealth channels over time |
| And our brand is a very strong brand, and it's gaining more and more traction in the channel, as we continue to as we continue to put resources behind it |
| And we're seeing strong demand for having some level of diversification in brands that are driving products through the channel |
| And what I would say to you is that there is a very strong appetite from the Wealth channel partners in having a more holistic product offering from TPG |
| We had a strong year -- a strong end to the year with $8.8 billion of capital raised in the quarter, primarily across the campaigns, I discussed earlier |
| We believe we are well positioned with $51 billion of dry powder to deploy into what we view as an improving market backdrop |
| And with -- with the growing momentum in the overall deal market and the strength of these portfolio companies, we do feel like there's going to be an increasing number of opportunities to drive liquidity this year |
| And we spent the last few years really investing in our companies, and we have some very well-performing companies that I think should be in a good position to realize value in the year and years ahead |
| And we feel like we're making good progress |
| In Private Equity, given TPG's deep sector focus, commitment to business building and strong track record of structuring win-win transactions |
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| In Real Estate, the performance of our portfolio reflects the broader challenges in the sector, resulting from higher rates |
| But there is some concern these days around middle market credit despite the growth there |
| And then the TPG side, stepping down to a below normal level in Q1 because of the seasonally light number of deals closing in Q1 |
| We are now actively investing and the current market backdrop is one of the most interesting environments we've seen since the early 2000s, for real estate credit, given the dynamics of higher rates, declining asset values and a significant pullback in commercial real estate lending |
| Although we remain cautious due to an uncertain macro environment characterized by increasing valuations, anticipation of Fed policy decisions and significant geopolitical tensions, 2024 is off to a very active start for TPG |
| It's important to note that these pro forma margins were elevated by the significant catch-up fees and transaction revenues in the fourth quarter |
| You talked about pipelines picking up back Q1 seasonally weaker and you integrate AG there |
| The fourth quarter margins, as I mentioned in my comments, were elevated by the catch-up fees |
| However, Q1 is often a seasonally light quarter for deal closings, as we saw last year |
| And then starting '24, Angelo Gordon initially will weigh on the margin, but this will reverse as you realize cost synergies |
| That obviously had a significant impact on the portfolio |
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