Executive Summary / Key Takeaways

• TPG Inc. is demonstrating robust growth and strategic execution, marked by a 20% year-over-year increase in total Assets Under Management (AUM) to $286.4 billion and an 18% rise in quarterly Fee-Related Earnings (FRE) as of Q3 2025. The firm is actively pursuing a goal to double its AUM to $500 billion over the next several years through core growth, organic innovation, strategic acquisitions, and expanding its presence in private wealth and insurance channels.
• The company achieved near-record fundraising of $18 billion in Q3 2025, exceeding its full-year 2024 capital raise, driven by strong first closes for flagship private equity funds (TPG Capital X and Healthcare Partners III) and significant momentum in its credit platform. This performance highlights TPG's ability to gain market share in a competitive and often challenging fundraising environment.
• TPG's investment strategy is underpinned by a differentiated approach to value creation, with over 80% of value in its Capital and Growth funds derived from earnings growth over the past decade, significantly outpacing the S&P 500. This is complemented by a disciplined approach to risk management, particularly in credit, which has resulted in low nonaccruals and proactive exits from vulnerable sectors like subprime auto.
• The recent acquisition of Peppertree Capital Management in July 2025, adding $8 billion in AUM in digital infrastructure, and the launch of new initiatives like T-POP (perpetually offered private equity) and TPG Sports, underscore the firm's commitment to organic and inorganic expansion into high-growth, thematic areas. These initiatives are expected to be immediately accretive to FRE and after-tax distributable earnings (DE) per share.
• TPG anticipates continued FRE margin expansion, targeting the mid-40s by year-end 2025, with incremental margins expected to be well above this level in the coming years. This is supported by accelerating fee-related revenue (FRR) growth, particularly in the latter half of 2025, as new funds activate and operational leverage is realized.

A Legacy of Innovation and Strategic Expansion

TPG Inc., founded in 1992 by the legendary investor David Bonderman, has evolved into a leading global alternative asset manager, distinguished by its unconventional investment philosophy and pioneering spirit in private equity, particularly in Asia. The firm's journey, marked by its Initial Public Offering (IPO) in January 2022 and subsequent strategic acquisitions, has laid the groundwork for its current diversified and rapidly expanding platform. TPG's overarching strategy centers on delivering attractive risk-adjusted returns to clients through a distinctive business approach and a diversified array of innovative investment platforms, positioning it for highly profitable and sustainable growth.

The firm operates across six multi-strategy investment platforms: Capital, Growth, Impact, TPG Angelo Gordon, Real Estate, and Market Solutions. This diversified structure allows TPG to pursue a broad range of investment strategies, primarily in private equity, credit, and real estate, within attractive sub-segments of these asset classes. The strategic acquisition of Angelo Gordon in 2024 was a pivotal moment, integrating robust credit and real estate capabilities and enabling significant revenue synergies. This expansion has been complemented by organic innovations such as TPG Healthcare Partners (2019), TPG Rise Climate (2021), TPG GP Solutions (TGS, 2021), TPG NEXT (2022), TPG Life Sciences Innovation (LSI, 2023), and TPG Real Estate Credit Opportunities (TRECO, 2023).

TPG's competitive positioning is strong, particularly in a market where institutional clients are consolidating relationships with fewer General Partners (GPs). TPG is gaining market share due to its consistently strong returns and a highly disciplined investment approach. The firm differentiates itself through a focus on deeply thematic areas and active partnership with portfolio companies to drive growth. Over the past decade, more than 80% of value creation across TPG Capital and Growth funds has stemmed from earnings growth, significantly outperforming the S&P 500, where multiple expansion accounted for over 40% of value. This fundamental differentiation resonates strongly with clients and is a key driver of fund-over-fund growth across its private equity strategies.

TPG's technological differentiation lies in its sophisticated, data-driven investment processes and proprietary deal sourcing capabilities, which are continuously enhanced by integrating advanced analytics and artificial intelligence (AI) across its platforms. The firm has established an "AI center of excellence" to drive AI adoption within its portfolio companies, leveraging technology to enhance operational efficiency and identify new investment themes. For instance, TPG's Tech Adjacencies platform has made minority investments in leading large language model developers, expanding its exposure to Gen AI development and providing differentiated insights into this rapidly evolving technology ecosystem. Furthermore, its Credit Solutions business recently anchored an innovative debt financing for xAI, one of the world's leading AI companies, demonstrating TPG's ability to provide creative capital solutions in high-growth technology sectors. This strategic integration of technology strengthens TPG's competitive moat by improving deal sourcing, enhancing value creation in portfolio companies, and identifying new, high-potential investment opportunities. The firm's wholly-owned public benefit organization, Y Analytics, also provides impact research and rigorous assessment measures for impact investments, representing a methodological differentiation in the Impact platform.

Financial Performance and Operational Momentum

TPG's financial performance in the third quarter of 2025 underscored its accelerating momentum. Total revenues surged by 43% year-over-year to $1.22 billion, propelled by a 14% increase in fees and other income and a substantial 90% rise in capital allocation-based income. Management fees, a core component of recurring revenue, grew by 15%, reaching $470.5 million for the quarter. This growth was broad-based across platforms, with notable contributions from Impact, Capital, TPG AG Credit, Market Solutions, Growth, and Real Estate. The Capital platform, for example, saw a $19.3 million increase in management fees, primarily from the activation of TPG X. The recent acquisition of Peppertree Capital Management contributed $18.2 million in revenues and $14.7 million in net income for the period ended September 30, 2025, immediately bolstering the Market Solutions platform.

Capital allocation-based income, which includes performance allocations and capital interests, saw a significant 90% increase to $627 million. Performance allocations alone jumped by 93% to $592.9 million, driven by strong performance across the Capital, Real Estate, Market Solutions, and Impact platforms. This robust performance translated into a net income attributable to TPG Inc. of $67.1 million for the quarter, a substantial increase of $58.2 million year-over-year.

The firm's operational efficiency is reflected in its Fee-Related Earnings (FRE) of $225 million for Q3 2025, representing an 18% year-over-year growth and a 44% FRE margin. This aligns with management's guidance to exit 2025 with a margin in the mid-40s, with expectations for continued expansion in the coming years. Total expenses increased by 19% to $1.03 billion, primarily due to higher performance allocation compensation and increased general, administrative, and other expenses, including higher rent from the new New York office lease. However, equity-based compensation decreased by 35%, partly due to the reversal of awards no longer probable of vesting.

Liquidity remains strong, with total liquidity of $3.09 billion as of September 30, 2025, comprising $1.08 billion in cash and cash equivalents and significant available borrowing capacity. The firm's debt obligations increased by $510 million, primarily due to the issuance of $500 million in 2036 Senior Notes, but TPG maintains a conservative leverage profile. The company's accrued performance allocation compensation increased by $666.5 million, reflecting strong value creation in its funds.

Strategic Initiatives and Future Outlook

TPG's strategic outlook is focused on sustained, accelerated growth, with a stated ambition to double its AUM to $500 billion over the next several years. This growth will be fueled by five core drivers: expanding its core businesses, organic innovation, inorganic additions, and increasing penetration in the private wealth and insurance channels.

Fundraising momentum is expected to continue, with management anticipating "significantly more capital" raised in 2025 compared to 2024. This is supported by ongoing campaigns for flagship funds like TPG Capital X and Healthcare Partners III, which secured $10.1 billion in their first close, and the successful final close of the TRECO real estate credit strategy at $2.1 billion, exceeding its initial target by over 35%. The credit platform, in particular, is poised for a multi-year growth period, with credit AUM not yet earning fees standing at nearly $11 billion, representing over $100 million in annual revenue opportunity. TPG is also expanding its presence in the private wealth channel with products like T-POP, which has already attracted approximately $900 million in inflows since its launch five months ago, and TCAP, a non-traded BDC with over $4 billion in AUM.

Deployment activity is projected to accelerate in the latter half of 2025, leveraging a record $73 billion in dry powder. TPG's pipeline is rich with proprietary, off-market opportunities, and its strategies, such as GP-led secondaries (TGS), Tech Adjacencies, and Credit Solutions, are well-suited for uncertain market environments. Recent investments, including the carve-out of Proficy from GE Vernova (GEV), the take-private of Hologic (HOLX) for up to $18 billion, and the acquisition of Kinetic in the transition infrastructure space, demonstrate the firm's ability to execute complex, thematic transactions.

The firm's commitment to inorganic growth is evident in the Peppertree acquisition, which adds immediate scale in the digital infrastructure space and is expected to be immediately accretive to FRE and after-tax DE per share. TPG also recently announced an agreement to acquire PTC's (PTC) industrial connectivity and IoT businesses, further expanding its technology footprint. These acquisitions are strategically aligned to leverage TPG's deep sector expertise and global client base.

Competitive Landscape and Differentiated Edge

TPG operates in a highly competitive alternative asset management industry, vying with global giants such as Blackstone Inc. (BX), KKR & Co. Inc. (KKR), Carlyle Group Inc. (CG), and Apollo Global Management Inc. (APO). While these competitors often boast larger scale and broader global footprints, TPG distinguishes itself through a focused, thematic investment approach and a strong emphasis on client relationships.

TPG's strength in niche strategies and its ability to cultivate deep client partnerships enable it to compete effectively. For instance, in the private equity market, TPG's consistent investment performance and strong distributions per invested capital (DPI) are key differentiators, allowing it to gain market share even as institutional clients consolidate their relationships. In structured credit, TPG is a market leader in residential mortgage securitizations, a testament to its specialized expertise and vertical integration. The Twin Brook direct lending business maintains a leading position in the lower middle market, characterized by disciplined underwriting, stable returns, and a portfolio exclusively comprising first-lien loans with maintenance financial covenants. This focus on downside protection and active portfolio management has resulted in extremely limited nonaccruals (less than 2%) and a stable average interest coverage ratio of approximately 2x.

Compared to larger peers, TPG's more agile structure allows for faster decision-making in mid-sized deals. While direct quantitative comparisons with all private competitors are challenging to ascertain, TPG's growth trajectory and profitability are competitive. Its operational execution, however, is continuously being optimized to enhance efficiency and maintain its competitive edge. The firm's proactive risk management, as demonstrated by its rotation out of the subprime auto sector due to weakening fundamentals, further highlights its disciplined approach.

Risks and Considerations

Despite its strong growth trajectory, TPG faces several inherent risks. Market volatility, policy uncertainty (including tariffs and changes in tax laws like the OBBBA and Pillar 2 rules), and fluctuating interest rates can materially affect the fair value of funds and the ability to source attractive investments. The inherent uncertainty in valuations means that reported fair values may differ materially from ultimately realized values.

Clawback obligations, though currently modest at $6.6 million net of tax, represent a contingent liability that could increase if fund performance deteriorates significantly. Legal proceedings, such as the ongoing lawsuits related to the TIM Hellas investment, also pose a risk, with potential for material financial impact despite management's belief that such outcomes are unlikely. Furthermore, the successful integration of acquired companies and the realization of anticipated benefits, as seen with Peppertree, are crucial for sustained growth. The firm's liquidity needs, including funding working capital, debt service, and strategic growth initiatives, require careful management.

Conclusion

TPG Inc. is executing a compelling investment thesis centered on diversified growth, differentiated performance, and strategic market share expansion. The firm's robust financial performance in Q3 2025, marked by significant increases in AUM, fee-related revenues, and net income, reflects the successful integration of past acquisitions and the strong momentum across its multi-strategy platforms. TPG's commitment to organic innovation, strategic inorganic additions, and expanding its reach into high-growth distribution channels like private wealth and insurance positions it for sustained long-term value creation.

The firm's competitive advantages, rooted in its thematic investment approach, proprietary deal sourcing, and advanced technological integration, enable it to outperform in challenging market conditions. While macroeconomic uncertainties and competitive pressures persist, TPG's disciplined risk management and clear strategic roadmap, including its ambitious AUM growth target and commitment to FRE margin expansion, underscore its potential for continued outperformance. Investors should recognize TPG's strategic agility and differentiated value proposition as key drivers for its future success in the evolving alternative asset management landscape.