TPG Inc.

Good morning, and welcome to the TPG's second quarter 2024 earnings conference call. Currently, all callers have been placed in a listen-only mode, and following management's prepared remarks, the call will be opened up for your questions. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you need to remove yourself from the queue, press star 2. To get as many questions as time permits, we ask that you please limit yourself to one question. At any time, should you need operator assistance, please press star zero. Please be advised that today's call is being recorded. Please go to TPG's IR website to obtain the earning materials. I will now turn the call over to Gary Stein, Head of Investor Relations at TPG. Thank you. You may now begin.

Thanks, operator, and welcome, everyone. Joining me this morning are John Winkle-Reed, Chief Executive Officer, and Jack Weingart, Chief Financial Officer. In addition, our executive chairman and co-founder, Jim Coulter, and our president, Todd Szczycki, are also here and will be available for the Q&A portion of this morning's call. I'd like to remind you this call may include forward-looking statements that do not guarantee future events or performance. Please refer to TPG's earnings release and SEC filings for factors that could cause actual results to differ materially from these statements. TPG undertakes no obligation to revise or update any forward-looking statements except as required by law. Within our discussion and earnings release, we're presenting GAAP and non-GAAP measures, and we believe certain non-GAAP measures that we discuss on this call are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to the nearest GAAP figures in TPG's earnings release, which is available on our website. Please note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any TPG fund. Looking briefly at our results for the second quarter, we produced a gap net loss attributable to TPG Inc. of $14 million and after-tax distributable earnings of $207 million for 49 cents per share of Class A common stock. We declared a dividend of 42 cents per share of Class A common stock, which will be paid on August 30, 2024, to holders of record as of August 16, 2024. I'll now turn the call over to John. Thanks, Gary.

Good morning, everyone. Our strong second quarter results highlight the significant momentum across our business as we continue to successfully scale and diversify. We finished the quarter with $229 billion of AUM and $137 billion of fee-earning AUM across more than 30 strategies in private equity, credit, and real estate. Over the course of last year, we drove a step-function change in our growth profile and earnings power as a result of both organic and inorganic activity. Our firm is capitalizing on our expanded breadth. And in my comments today, I'll focus on two areas in particular. First, the strong momentum that our capital raises across our diversified product base. And second, our active pace of deployment and the differentiated deal types we are sourcing across our platforms. In addition to these two topics, before I hand the call over to Jack, I'll also touch on a significant market volatility that's been taking place over the last few trading days. Beginning with fundraising, we raised $6.3 billion in the second quarter. Importantly, over 70% of this capital, or $4.5 billion, was raised across our credit strategies. During the quarter, we held a final close for Twinbrook's fifth drawdown fund. In total, we raised $3.9 billion, which exceeded our original fund target and is 13% larger than its predecessor. This successful outcome was driven by Twinbrook's strong investment track record and differentiated focus on sponsor-backed lower middle market companies as investors seek to complement and diversify their exposure to the U.S. direct lending market. In addition to receiving strong support from existing clients, Twinbrook meaningfully expanded its investor base globally, particularly in Asia, and increased diversification towards sovereign wealth funds as well as multinational insurance companies in Europe and Japan. This campaign is a strong indicator of the power of our platform and the cross-selling opportunity in front of us. We are also raising capital through other vehicles to accommodate investors across the broader Twinbrook platform as we continue to out-originate our capital base. This includes standing up new SMAs and strategic partnerships with our LPs, as well as through evergreen structures and our non-traded BDC, TCAP. TCAP continues to raise capital at a steady pace and ended the quarter with $2.5 billion of total AUM. Currently, TCAP is being distributed by two of the largest wirehouses in the U.S., and we expect a third to be added by the end of this quarter. Turning briefly to our Credit Solutions platform, during the quarter we raised approximately $2 billion, including $1.1 billion for the first closing of Credit Solutions III. We also held additional closes for Essential Housing III, bringing the total capital raised for the fund to $1.3 billion at the end of the second quarter. Looking to the rest of the year, we expect our robust fundraising momentum to continue, led by our Rise Climate franchise. Last quarter, we stated that we expect our impact platform to achieve $35 billion of AUM within two years, and we believe that we're tracking ahead of plan on that objective. In our climate private equity strategy, we're seeing strong support from both existing and new clients. We are holding a first close for Rise Climate 2 this quarter and expect to announce a strong start to that campaign on our next call. We continue to target an aggregate of $10 billion across this fund and the Global South Initiative, and we expect the majority of the capital to be raised in 2024. Additionally, we expect to hold a close before year-end for our first Rise Climate Transition Infrastructure Fund. In May, we announced the $1.5 billion strategic partnership with Hasana Investment Company, a substantial portion of which will anchor our infrastructure fund, and we are in active dialogue with other LPs to provide additional anchor capital. Our leadership position in climate investing is a powerful differentiator that enables us to organically expand into adjacent asset classes with significant growth potential, such as infrastructure. As you can see, our fundraising momentum continues to ramp and is well diversified across our business. Similarly, our deployment pace remains robust. We invested $7.6 billion of capital in the second quarter and more than $35 billion over the last 12 months on a pro forma basis, including TPGAG. I'll spend a moment on TPG Capital to illustrate the interesting ways we are deploying capital through our proprietary and distinctive sourcing approach. Over the last 12 months, TPG Capital has announced or completed nine investments with an aggregate equity commitment of nearly $7 billion that resulted from longstanding C-level relationships within our core thematic areas. More than half of this capital was invested into deals that were either a complex corporate carve-out or creative partnership. TPG has a long and successful history of unlocking value and driving growth through these types of differentiated deals. I also want to highlight our activity in Europe, which is a high-priority region for us. Our president, Todd Sosinski, just returned after spending six weeks there working closely with our teams to further build on our strong investment momentum, client relationships, and franchise in the region. Over the last few months, we have announced or closed several interesting transactions in Europe, and our pipeline remains strong. For example, in the second quarter, TPG Capital announced the €3.9 billion carve-out of Arion, a leading provider of SaaS solutions for the European property industry, from Ariel Bank in Germany. This investment represents an attractive opportunity to accelerate Aerion's growth as a standalone company in a resilient but fragmented market. Turning to TPG Growth, in the quarter we closed the proprietary acquisition of Untitled Entertainment, a leading Hollywood talent management firm. Untitled will be part of a newly formed platform that will leverage our deep experience investing in media and entertainment to acquire and build a diversified global business focused on talent management and representation. Our rise and rise climate funds continue to deploy capital at a steady pace, given our differentiated position as the partner of choice in the impact space. Since quarter end, we have already signed or closed four additional transactions with an aggregate equity commitment of approximately $800 million. RISE recently led an investment of over $200 million into Food Smart, a leading U.S. tele-nutrition provider and food benefits management platform. Additionally, RISE Climate agreed to acquire Olympus Terminals, a large-scale renewable fuels logistics provider in California. Olympus plays a critical role in the decarbonization value chain and represents our focus on investing in companies enabling the energy transition. Turning to our real estate strategies, over the last few years, We had been anticipating substantial stress in the system to drive attractive investment opportunities, so we were purposely patient in our approach to capital deployment. Since mid 2023, we have seen a significant increase in investment activity, acquiring a number of distinctive, high-quality assets from sellers in need of liquidity. With combined drive power of $14 billion across our real estate businesses, we expect to lean into the growing number of interesting opportunities we are sourcing in our core areas of focus. We invested $1.2 billion in the quarter, and I'll share some brief highlights. Within TPG Real Estate, during the quarter, we completed investments in two office-to-residential conversions in New York City. In aggregate, we acquired the properties at a significant discount to their prior basis, and we're working with best-in-class partners to execute these conversions. TPG AG's European real estate business has also been capitalizing on this environment, including investing in a mixed-use property in Berlin, several Swedish- logistics assets, and a home building platform in the UK. Each transaction was off-market and bilaterally negotiated with highly motivated sellers. Our TPG AG real estate sourcing model, which leverages hundreds of operating partner relationships across local markets, continues to demonstrate its unique value proposition. Finally, within credit, we deployed $4.5 billion across our strategies in the second quarter. Twinbrook, our direct lending business, continued its strong investment pace in the quarter, bringing total gross originations in the first half of the year to a record $4.8 billion. This exceeds Twinbrook's prior first half gross origination record by more than a billion dollars. Twinbrook is a leader in lending to lower middle market private equity-backed companies, and 100% of Twinbrook's loans are senior secured, first lien with financial covenants. Twinbrook has generated attractive net returns of 11% since inception with an annualized loss rate of only one basis point. During the second quarter, our credit solutions platform deployed approximately $900 million of capital, primarily through our proprietary essential housing business. Notably, essential housing, which provides land financing to leading home builders, has seen substantial origination volumes. we closed on $1.8 billion of project value across 67 projects with nine homebuilders during the first two and a half months of the current funds investment period. Within our credit solutions funds, given our flexible mandate, we continue to monetize our public positions and are currently evaluating the largest pipeline of private investment opportunities since the strategy was launched. We are actively working to partner with a range of public and private companies with various needs for bespoke private capital solutions. Finally, we continue to see growing client demand from specialty private credit, given the desire to diversify exposure away from corporate credit into more non-correlated risk. During the quarter, our structured credit platform deployed $1.9 billion across a diverse array of consumer, specialty, and mortgage finance transactions. Most notably, our asset-based credit fund completed its first investment in Australia, demonstrating the global reach of this business. Overall, given the breadth of capabilities within our credit business, we are well-positioned to continue to accelerate growth as evidenced by our fundraising momentum, deployment pace, and investment pipelines. Each of these strategies is currently out-originating its capital base, so we see a significant opportunity to scale them through a combination of raising additional capital and and driving further product innovation. Continuing with this theme, innovation is the cornerstone of our ability to grow the firm. Looking at a five-year period from the beginning of 2021 to the end of 2025, we expect we will have raised approximately $40 billion during this timeframe across new strategies pro forma for TPGAG. This includes growing our Rise Climate franchise and expanding into infrastructure, leveraging our real estate footprint across asset classes and geographies, including Japan, scaling our GP-led secondaries business, and broadening our credit platform. Our proven ability to innovate is even more powerful across our well-diversified platform, which provides many new avenues for organic growth. Before I turn the call over to Jack, I'd like to comment briefly on the current market backdrop. Based on the market correction we've all witnessed over the last few days, it seems likely we've entered a new period of increased volatility marked by more imminent interest rate cuts and heightened geopolitical risks. Although the markets have clearly become far more volatile since late last week, it's not yet clear how this may impact the underlying economy. We are fundamental investors, and from our perspective, the fundamentals we look at every day remain reasonably strong. We have experienced many market cycles during our careers. and we know periods of market dislocation create compelling investment opportunities. We've been preparing for an environment like this, and we are well positioned with $53 billion of long-dated capital available to invest across our private equity, credit, and real estate platforms. Now I'll turn it over to Jack to review our financial results.