On Thursday, JPMorgan (NYSE:JPM) revised its price target for TPG Inc. (NASDAQ: TPG), a global alternative asset firm, reducing it to $43.00 from the previous $44.00 while maintaining a Neutral rating on the stock.
The adjustment follows TPG's performance in fundraising activities throughout the previous year, with the third quarter of 2023 bringing in $4.6 billion and the fourth quarter significantly higher at $8.8 billion. This marked a notable increase from the $2.0 billion and $1.5 billion raised in the first and second quarters of 2023, respectively.
The fourth quarter surge was partly due to the closure of TPG's acquisition of Angelo Gordon in November. Projections for the first quarter of 2024 suggest a continuation of this trend, with substantial contributions expected from the final close of Asia VIII within the Capital segment, ongoing fundraising from Growth VI, the inclusion of a $1 billion investment from the UAE in Rise Climate II, and diversified activity from AG Credit.
JPMorgan anticipates that Asia VIII will be the primary contributor of catch-up fees, having had a first close with $3.4 billion in the second quarter of 2022. The firm forecasts $8 million in catch-up fees for the first quarter of 2024, consistent with prior projections but significantly lower than the $49 million in the fourth quarter of 2023, which included several final closes such as TPG Capital IX, Rise III, and NewQuest V.
The outlook for 2024 includes at least $10 billion of AG Credit flows, with significant contributions expected from Growth VI and Rise Climate II. TPG is also in the market with TRECO within the real estate sector and TPG NEXT in the Impact sector.
Additionally, TPG is planning to launch two first-time vehicles: a global south initiative and a dedicated climate infrastructure fund. Although Alterra/UAE has committed $0.5 billion to the global south initiative, these new funds are not expected to exceed $1 billion in total capital commitments.
TPG, now the largest U.S.-based publicly traded alternative asset manager without a significant insurance operation, is expected to make strides in this area. The firm's acquisition of Angelo Gordon has expanded its platform, which includes various credit and asset-backed strategies that could attract insurance capital.
InvestingPro Insights
TPG Inc. (NASDAQ: TPG) has recently drawn market attention with its robust fundraising activities and strategic acquisitions, such as that of Angelo Gordon. To provide a deeper understanding of TPG's financial health and market position, key metrics from InvestingPro offer a real-time snapshot of the company's performance. TPG's market capitalization stands at $16.39 billion, reflecting its significant presence in the alternative asset management sector. Despite a high Price/Earnings (P/E) ratio of 188.33, the adjusted P/E ratio for the last twelve months as of Q4 2023 is more moderate at 79.89. This suggests a potential alignment of stock price with near-term earnings growth, a point underscored by the PEG ratio of 0.75 for the same period, indicating that the stock may be reasonably priced relative to its earnings growth.
InvestingPro Tips highlight that TPG is expected to be profitable this year, with net income projected to grow. This aligns with the positive revenue growth of 19.32% over the last twelve months as of Q4 2023. Furthermore, TPG's liquid assets surpass its short-term obligations, providing financial stability for the company. However, analysts have noted a potential sales decline in the current year and have revised their earnings expectations downwards for the upcoming period, which investors should consider. For those seeking more detailed analysis, there are additional InvestingPro Tips available, offering insights such as the company's gross profit margins and stock price volatility. To access these tips and enhance your investment strategy, visit https://www.investing.com/pro/TPG and use the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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