TPG has agreed to buy debt and real estate manager Angelo Gordon for $2.7bn as the US private equity group diversifies into credit based investments with its first major acquisition since going public last year.

The acquisition of New York-based Angelo Gordon, one of the largest investors in private credit markets and a savvy distressed debt player, will be predominantly made in stock.

TPG said it will pay $970mn in cash and the remainder in stock by issuing 62.5mn new shares in a deal it forecast would increase its fee-based earnings by as much as 10 per cent next year. In first-quarter results released on Monday, TPG generated $99mn in fee-related earnings, generally beating analyst forecasts.

TPG listed its shares last year as part of a growth push by the $137bn in assets group that many expected would help it acquire a credit-based investment manager, broadening its portfolio that is mostly focused on growth oriented corporate buyouts and its “Rise” platforms focused on sustainability and climate-based investments.

Angelo Gordon, which manages $73bn in assets with 650 employees worldwide, has had important roles in steering recent bankruptcies like Revlon and Envision Healthcare. It also has extensive operations financing real estate.

TPG, which went public in January 2022 at a $9bn valuation, slightly higher than its current market capitalisation, hopes to use its bigger size to appeal to the large pools of capital that increasingly prefer to deal with a limited number of investment managers.

TPG’s chief executive Jon Winkelried said on Monday that the acquisition “underscores our continued focus on growing and scaling through diversification, while driving long-term value for our shareholders”.

Josh Baumgarten, co-chief executive of Angelo Gordon, said the merger would add “scale” to its investment operations during a time of strong opportunities in credit and real estate markets.

The transactions come as private credit managers increasingly replace traditional banks in financing buyouts and even in making large real estate and corporate loans. The deal adds to a wave of consolidation in private capital as asset managers look to bolster their credit investment capabilities.

Several large debt firms have been acquired in recent months and another prominent player in the sector, Fortress Investment Group, is expected to be acquired by Mubadala, the Abu Dhabi-based sovereign wealth fund, the Financial Times reported last week.

TPG previously had a partnership with the credit specialist Sixth Street Partners, which the sides terminated in 2020.

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