TPG, an alternative asset management firm, and Angelo Gordon, a $73 billion alternative investment firm focused on credit and real estate investing, entered into a definitive agreement under which TPG will acquire Angelo Gordon in a cash and equity transaction valued at approximately $2.7 billion. The purchase price is based on TPG’s share price as of May 12, including an estimated $970 million in cash and up to 62.5 million common units of the TPG Operating Group and restricted stock units of TPG. The transaction also includes an earnout based on Angelo Gordon’s future financial performance valued at up to $400 million.
TPG will fund the cash portion of the transaction with its current cash balance and undrawn revolver. The transaction is expected to be mid-to-high single digit accretive to TPG shareholders on an FRE and after-tax DE per share basis in 2024 before any revenue or cost synergies.
Upon closing of the transaction, Angelo Gordon will become an investing platform within TPG and Josh Baumgarten and Adam Schwartz, co-CEOs of Angelo Gordon, will become co-managing partners of the platform and report to Jon Winkelried, CEO of TPG.
The transaction is subject to customary closing conditions, including HSR, international regulatory approvals, and other client and third-party consents. The transaction, which was unanimously approved by TPG’s board of directors, is expected to close in Q4/23.
Founded in 1988, Angelo Gordon has more than 650 employees across 12 offices in the United States, Europe and Asia. Angelo Gordon’s $55 billion credit platform offers capabilities across the credit investing spectrum, including corporate credit, direct lending and structured credit, and its $18 billion real estate platform manages real estate strategies with reach in the United States, Europe, and Asia, as well as a net lease strategy.
TPG and Angelo Gordon had $208 billion in combined assets under management as of Dec. 31, 2022. Upon the close of the transaction, TPG will manage assets across a set of investment strategies, including private equity, impact, credit, real estate and market solutions. The addition of Angelo Gordon marks an expansion into credit investing for TPG.
“This strategic transaction meaningfully expands our investing capabilities and broadens our product offering. The addition of Angelo Gordon also underscores our continued focus on growing and scaling through diversification while driving long-term value for our shareholders,” Winkelried said. “Following more than a year of building relationships between the leadership teams of both organizations, we are confident the combination represents a strong strategic and cultural fit and will create additional opportunities for employees of both firms. We look forward to welcoming the Angelo Gordon team as we execute on our shared vision.”
“This is a terrific partnership that provides Angelo Gordon with the scale to capitalize on the growing opportunity set we see in the credit and real estate markets, the diversification to create new solutions for our clients across the risk spectrum in all market conditions, and the opportunity to share our collective expertise, insights and knowledge,” Baumgarten, who is also the head of credit at Angelo Gordon, said.
“We are proud to be joining a world-class investment platform that shares our philosophy on firm culture, investment excellence and delivering for clients,” Adam Schwartz, who is also the head of real estate at Angelo Gordon, said. “This transaction is a testament to the team and business that we have built over nearly 35 years, and we are excited about the new and expanded opportunities ahead for our employees and LPs.”
“Both firms have grown organically over the past three decades from private founder-led businesses into seasoned firms with next-generation executive leadership poised to accelerate further growth as part of a diversified platform,” Jim Coulter, co-founder and executive chairman of TPG, said. “There is a clear alignment of interests, values and culture with a focus on entrepreneurship, innovation and investment excellence. We look forward to building on our collective momentum together.”
Ardea Partners acted as lead financial advisor to TPG and provided a fairness opinion to TPG’s board of directors. J.P. Morgan Securities and Morgan Stanley also acted as financial advisors to TPG. Weil, Gotshal & Manges served as TPG’s lead transaction counsel. Davis Polk & Wardwell, Shearman & Sterling and Cleary Gottlieb Steen & Hamilton advised TPG with respect to tax, executive compensation and investment fund matters, respectively. Goldman Sachs and Piper Sandler acted as financial advisor to Angelo Gordon and Paul, Weiss, Rifkind, Wharton & Garrison served as legal counsel.