TPG Inc.

Good morning and welcome to TPG's second quarter 2026 earnings conference call. Currently, all callers have been placed in a listen-only mode and following management's prepared remarks, the call will be open 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 to as many questions as time permits, we ask that you please limit yourself to one question. At any time, if you should need operator assistance, press star zero. Please be advised that today's call is being recorded. Please go to tpg's IR website I'll turn the call over to Gary Stein, Head of Investor Relations at PPG. Thank you. You may begin.

Great. Thanks, Operator, and welcome, everyone. Joining me today are Jon Winkelried, Jack Weingart, Jim Coulter, and Todd Sisitsky, as well as our new CFO, Axel Andre. 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. The 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 a solicitation of an offer to purchase an interest in any TPG fund. Looking briefly at our results for the second quarter, We reported half net income attributable to TPG Inc. of $93 million and after-tax distributable earnings of $280 million, or 69 cents per share of Class A common stock. We declared a dividend of 59 cents per share of Class A common stock, which will be paid on August 28, 2026, to holders of record as of August 14, 2026. With that, I'll turn the call over to Jon.

Good morning, everyone. Thank you for joining us. TPG delivered strong results in the second quarter, capping off a record first half for the firm. So far, 2026 has been defined by a series of inflections across AI, private credit, monetary policy, and geopolitics that have reshaped the macro backdrop and investing landscape. As this environment drives a wider dispersion of performance across our industry, we believe TPG is well positioned to continue taking share given our proven track record and differentiated investment capabilities. We're actively capitalizing on an expanding opportunity set and our clients continue to look for ways to deepen their engagement with us across our franchise. Turning to our results, fee-related revenue grew 27% year-over-year to $628 million, driven by a step-up in management fees and our second-highest quarter ever for transaction and monitoring fees. Our capital markets business continues to be a powerful revenue driver as we further embed our capabilities across each of our asset classes. Our strong top-line growth and increasing operating leverage drove a 43% year-over-year increase in fee-related earnings to $315 million in the second quarter, resulting in a 50% FRA margin. Since becoming a public company four and a half years ago, Our LTM FRE has grown at a 31% annualized rate, and we've expanded our margin by over 1,000 basis points. We ended the quarter with $327 billion of total assets under management, up 25% year over year, and have continued to set new records for capital raising and deployment on an LTM basis, which I'll highlight now. Starting with capital formation, we raised $16 billion in the second quarter, bringing our year-to-date total to more than $26 billion. Given our strong progress in the first half of the year, combined with our robust pipeline for the second half, we remain confident that we will meet or exceed our target of raising more than $50 billion in 2026. We contain strong fundraising momentum despite various headwinds in the market, underscoring the strength of our franchise. We're further expanding our relationships with our existing client base as well as attracting new pockets of capital, which is a direct reflection of the differentiated returns we've consistently delivered. Across our private equity strategies, we raised $8 billion in the second quarter, up 39% year-over-year. For QBZ Capital 10 and Healthcare Partners 3, we raised $1.3 billion, bringing total capital raise to over $14 billion, including commitments that are signed but not yet closed. Our momentum remains strong as we work towards the final close for this important fundraise. In our market solutions platform, we held the first close of $1 billion for our 11th Pepper Tree Fund. As a reminder, we acquired Pepperdry, a leading infrastructure manager in the U.S. telecom power market, a year ago. Since then, we've made notable progress introducing Pepperdry's strategy to our existing clients, with nearly one-third of commitments in the first close coming from legacy TPG relationships. As a result, we expect to grow our fund size by 25%. In credit, we raised $5.6 billion during the quarter. As part of our strategic partnership with Jackson Financial, we received $2.5 billion in new multi-year commitments this quarter, bringing total commitments to $4.5 billion since the partnership began in February. As we deploy this capital into attractive opportunities, we're beginning to see the flywheel take shape, further expanding our origination capabilities and enabling us to more effectively serve a broad base of insurance clients. For our real estate platform, we're in the early stages of a multi-year fundraising cycle. We're currently in the market with all of our U.S. and Asia real estate equity funds, and we're experiencing strong demand ahead of first closes in the coming quarters. In the private wealth channel, while the broader industry has recently faced an acceleration in net flows across retail-oriented products, largely due to private credit concerns, our momentum continues to accelerate. We expect to gain share in the wealth channel, which is an important long-term growth driver for us. June marked the one-year anniversary of the launch of TPOP, our perpetual private equity product. Inflows across the TPOP strategy were approximately $450 million and a quarter, bringing total AUM to $2.9 billion at the end of June. We continue to successfully expand our global distribution footprint, adding a new international private bank platform during the second quarter, and another already in the third quarter. As advisors become increasingly selective around new allocations, TPOP is a preferred solution given its strong track record with annualized inception-to-date returns of 34%. PTAP, our non-traded BDC, reported gross inflows of $193 million in the second quarter, which is consistent with first quarter and reflects the durability of our strategy. Importantly, redemption requests were just 2.1% of total shares outstanding, well below the industry average. Our clients recognize PCAP's proven ability to generate attractive returns across cycles, given its leading position in the lower middle market. PCAP's one-year total net return of 9.9% is among the highest for non-traded VDCs and represents approximately 420 basis points of outperformance relative to the leveraged loan market. Turning to deployment, our investment activity continues to be very strong. We invested approximately $14 billion in the second quarter of 33% year-over-year, bringing our total over the last 12 months to a record $62 billion. Looking ahead, based on our current investment pipelines, we expect to maintain a robust deployment pace to the back half of the year. Our private equity strategies invested $7.2 billion during the quarter, which increased 60% year-over-year. While the market has been largely focused on AI disruption risks, we've been equally focused on identifying new opportunities created by AI. We've been actively investing behind the AI evolution through direct positions and leading LLMs, including OpenAI and Anthropic. These investments give us unique insight into emerging technology and adoption trends, which have helped guide our strategy. Additionally, we're underrunning significant AI-related growth and efficiency initiatives across the areas we invest in. A powerful example of this is our role as the lead founding partner of the OpenAI Deployment Company. Together with OpenAI and a group of leading investment firms, we've committed more than $4 billion of initial capital to form a new AI transformation and services platform. DeployCo is built to address the implementation bottlenecks in training AI adoption among large enterprises. Our investment in DeployCo was made through a collaboration between our TPG Capital, tech adjacencies, and hybrid solution strategies, and leverages our extensive track record in technology and structuring corporate partnerships. We're seeing firsthand the effective AI deployment requires not only trained forward deployed engineers, but also deep expertise in business processes and operational transformation. The combination of OpenAI's exceptional talent base and TPG's experience partnering with management teams is already unlocking value in our portfolio and creating new investment opportunities. For example, DeployCo has begun working with Conservice, a TPG capital portfolio company and leading utility management service provider. Its AI transformation is focused on automating bill intake and exception resolution as well as improving quality control through machine learning, resulting in greater growth and efficiency. Beyond DeployCo, our internal AI and technology capabilities are becoming increasingly important value creation driver for both our existing and new investments. In TPG Growth, just last week we closed the acquisition of Smith & Howard, a top 50 CPA firm serving clients across the Southeast. A key component of our investment thesis is the operational transformation of the business through AI enablement, including AI-powered lead generation and workflow automation. Our credit business continued to be active in the quarter with 4.4 billion of capital deployed across our strategies. In middle market direct lending, Twinbrook generated 2.3 billion of gross originations in the second quarter, bringing the year-to-date total to 4 billion, which is pacing ahead of our expectations. Add-on activity across our borrower base accounted for over 40% of our quarterly volume, Highlighting our embedded origination engine, which has been a structural advantage for our platform. Twinbrook has also been an important sourcing channel for Advantage Direct Lending, our recently launched core middle market direct lending strategy. Nearly half of ADL's investment activity to date has originated from Twinbrook, either through co-led transactions or lending to existing portfolio companies that have graduated from the lower middle market. And as a base finance, we deployed over a billion dollars of capital in the second quarter, including residential hold loans, equipment finance, and commercial mortgages. In credit and solution, we deployed over a billion dollars in the quarter, and our pipeline... ...facing balance sheet challenges... TPG's integrated platform combines scaled capital and flexible structuring capabilities to deliver tailored solutions where traditional lenders often cannot. During the quarter, we agreed to lead a financing for the carve-out of BMC Helix from BMC Software. We believe this transaction represents an important precedent as one of the first significant software LBOs this year. We were able to design a bespoke solution with strong covenants and downside protection that provides the borrower with execution certainty while securing attractive, risk-adjusted returns for our investors. Additionally, our European team structured a £900 million second lien facility to help Bally's Intralots propose a £2.2 billion acquisition of Evoke. This financing addresses Evoke's near-term maturity wall, materially de-risking the overall capital structure. The combination is expected to create a scaled pan-European operator in online gaming with meaningful synergies to improve cash generation and deleveraging. Given the changes occurring in the structure of the lending market, we're also seeing opportunities to leverage our deep sector and operational expertise to lead capitalized businesses and improve performance. We believe our proven ability to drive transformational change and inflict growth, combined with our full continuum of capital solutions, makes TPG a preferred partner for lenders, sponsors, and management teams. Turning to real estate, we continue to see attractive opportunities given reset valuations, increased replacement costs, limited supply growth, and improving fundamentals in the asset class. Activity has been accelerating across our real estate platform with $2.3 billion deployed in the second quarter, up 47% year-over-year. ActPlus, our core plus real estate strategy, acquired control of Echo Realty, A scaled, grocery-anchored retail platform after taking an initial minority stake earlier this year. We believe this is a compelling investment made at a discount to market value in a sector defined by recession-resilient demand and attractive supply dynamics. Along with our acquisition of Preterra in the multifamily residential space earlier this year, we continue to expand into lower cost of capital real estate, which represents a significant growth opportunity for us. Finally, we generated $5 billion of realizations during the quarter, bringing our year-to-date total to nearly $14 billion, up 28% from the first half of last year. While market conditions are temporarily impacting the timing of exits across our industry, our approach remains unchanged. We continue to be highly intentional in our monetization activity and see a healthy pipeline of exit opportunities across the portfolio. We expect the cadence of realizations to accelerate towards the end of this year and into 2027. Before I hand the call over, I wanted to address the leadership transition we announced in June. As most of you are aware, Axel Andre joined as our new Chief Financial Officer last week. Given the timing of Axel's arrival, Jack will discuss our financial results today, and he is working closely with Axel to ensure a seamless transition. I want to thank Jack for his leadership and immense contributions as CFO. When we were preparing to go public more than five years ago, I asked Jack to take on the challenge of building our public company finance function from the ground up. His deep knowledge of our firm and decades of industry experience have been instrumental in establishing our credibility as a public company and deepening the market's understanding of TPG. Jack is now fully transitioning into his role as CEO of Global Wealth Solutions, which he took on last year, in addition to his CFO responsibilities. Jack's leadership has already been critical to our growth in the channel, as evidenced by Key Pop's success in its first year. Jack begins to fully dedicate his time to the strategic growth area. We expect to further expand our wealth offerings and global distribution network. I'd also like to introduce and welcome Axel, who is here today with us. In our search for Jack's successor, we were focused on finding a proven leader who aligned closely with our collaborative and entrepreneurial culture while bringing deep public company CFO experience. Axel has served as CFO and led the financial strategy for a number of publicly traded companies, most recently Reinsurance Group of America. Given his deep familiarity with the insurance industry, Axel brings a set of skills that are highly complementary to our existing leadership team and expanding franchises. We're excited to have Axel join us, and we look forward to working closely with him to drive the next phase of our growth. I'll turn it over to Axel to say a few words.