According to a published article of Peter Grant and Ryan Dezember at Wall Street Journal, the private equity giant, TGP, which is a relatively new player in real estate investment, has closed its first real estate fund roughly around $2 billion in commitments. Such closing of fund occurred during the time that other big players were relatively increasing their appetite for real estate risk.
TGP's fundraising for their real estate fund began in the first half of 2014. Having a goal of at least $1.5 billion to $2 billion in mind, TGP was faced with a great challenge, even though they are considered as a significant firm with a total asset of $75 billion. Kelvin Davis, the senior partner at TPG who is co-head of its real-estate business stated via wsj that, "This took roughly around the time we expected, maybe a bit longer. We had to build some relationships from scratch, and understandably that takes time."
This new triumph for TGP started in 2009 when the company started investing through their buyout funds and special accounts. And their venture paid out in consonance with the strengthening economies in Europe and the U.S. and loosening credit markets. Andrew Moylan, head of real estate for Preqin, said via wsj that, "There's increased confidence in real estate among institutional investors," thus giving way for private-equity fundraising.
With the interview of wsj, James Coulter, TPG's co-founder stated that, "the firm's push into the real-estate business isn't tied to a possible IPO. Rather it is part of a strategy of "organically growing" TPG's alternative investment platforms and taking advantage of market opportunities."
Thought TGP broke new ground with the raising of $2 billion in real estate fund, they still acknowledge the challenges ahead. Mr. Davis via wsj affirmed to the fact that "the industry is enormously fragmented" and is seeing "relatively muted supply growth." And competition with large players lurks in the background especially that these players has an advantage when it comes to branding and marketing.
