Talk to just about anyone who’s worked at TPG Inc. over the past three decades and they’ve got a David Bonderman story.
There was the time he spent weeks holed up on a superyacht off the coast of Australia while authorities tried to question him over a $700 million tax bill. Or when executives rented a private island in the Caribbean to celebrate the wildly lucrative buyout of Continental Airlines.
There was that incident when Bonderman resigned from Uber Technologies Inc.’s board after making a sexist remark in response to board member Arianna Huffington. And, in events that now have added significance, Bonderman twice snubbed the Obama administration and flew to Vladimir Putin’s investment conferences in St. Petersburg after Russia invaded Crimea.
Within TPG there’s long been unease over some of his antics, but there was never any doubt he'd forged TPG’s identity and helped make it one of the world’s most successful investment firms. Risky bets were part of its DNA. The Russia trips, partying and his superyacht escapade, related by people close to TPG, are part of the complex legacy David “Bondo” Bonderman is leaving behind.
At 79, Bonderman has fully, finally handed off TPG — part of the great, generational shift now afoot in the $6 trillion private-equity business. He and co-founder Jim Coulter have passed the reins to Jon Winkelried, a one-time high-flyer at Goldman Sachs Group Inc. After years of rumor and speculation, TPG went public in January, belatedly following rivals Blackstone Inc. and Carlyle Group Inc. onto the stock market.
It now falls to Winkelried, known as Winks, to lead TPG into its next era. He must show the world, or at least shareholders, that TPG can deliver quarter upon quarter — and that Bondo’s freewheeling private domain has grown into a proper public company.
On Monday, the firm reported earnings for the first time, disclosing that assets rose to $113.6 billion at the end of 2021 — a 27% increase over the previous year fueled in part by fundraising for its climate strategy and investment performance. Net income in the fourth quarter though slipped to $41 million, an 8% decline from the prior-year period.
Among Winkelried’s immediate challenges: Playing catch up in the credit business, which has exploded into a major money-maker for others in private equity. He’s hunting for an acquisition, according to people familiar with the matter, after Alan Waxman left in 2020 — and took TPG’s $33 billion debt business, Sixth Street Partners, with him.
Winkelried will also have to rake in assets that can generate a reliable stream of fees, not just hunt big-game deals. TPG’s stock price will depend in no small part on what have become three crucial words in this business: assets under management. The question is whether TPG can hold on to the old Bondo magic as it grows and matures.
“Transitioning from a private partnership to a public company is a major undertaking, and it's not easy," said Hank Paulson, former U.S. Treasury Secretary, a long-time mentor to Winkelried at Goldman Sachs and now an executive director of TPG’s climate fund. "Jon has done it before and he's up to the task."
Bonderman, Coulter and Winkelried declined to comment for this story.
Even now Bonderman casts a seemingly indelible shadow. Run out of San Francisco and Dallas-Fort Worth, TPG long urged employees to think of themselves as the “Sir Mick Jagger” of private equity. The message: be yourself, regardless of fame or money.
And for three decades no one cultivated that mystique quite like Bondo.
“TPG culture starts with Bondo,” said Bennett Goodman, a longtime leveraged finance titan who’s done business with TPG. “He's an iconic deal guy — he'd get on a plane over 200 days a year circumnavigating the globe to chase deals and meet management teams.”
Coulter, the methodical, engineering-minded yin to Bondo’s frenetic, risk-loving yang, has mostly worked from the office, mentoring younger employees, putting out fires and keeping the business running. Together they’ve overseen brilliant successes — The turnaround of Continental Airlines, TPG’s early investments in Uber and Airbnb Inc. and the creation of one of the world’s biggest impact investing businesses, with the backing of rock legend Bono.
There were also the epic blunders, including TXU Corp., and Washington Mutual, where the firm lost billions in the wake of the financial crisis.
The TPG ethos has been mythologized in internal presentations for years. “Bondo And The Firm Are Weapons,” is one entry in a collection of slides obtained by Bloomberg News. “Not Wall Street: Encourage independent, non-consensus thinking and casual style,” reads another. “No Assholes — even when tempted” goes a third.
Among the material are photos of the Asia investment team dressed as Elvis Presley in Las Vegas, Bondo lighting the torch of TPG's “Olympic’’ ceremonies and an employee dog pile from a summer soccer tournament.
Other buyout barons have gotten richer. Blackstone’s Stephen Schwarzman, for instance, is worth $36.8 billion today – more than eight times as much as Bonderman, with a net worth of $4.1 billion, according to the Bloomberg Billionaires Index.
But the lanky, hyperkinetic Bonderman, one-time adviser to Texas billionaire Robert Bass, always seemed to exude a personal cool that the New York titans couldn’t quite match. He dialed in from Timbuktu, snowboarded in the Rockies, booked Tom Petty for an investor meeting (The Rolling Stones played for his 60th birthday party, Paul McCartney for his 70th). He joked that his Falcon jet was once a house of ill repute — it first came to him with red carpet and a French-style boudoir.
That attitude occasionally seeped into the way he ran TPG.
He spent weeks on the Helios 2 superyacht off the coast of Australia in 2009, not daring to set foot in the country or anywhere else in the British Commonwealth, while tax authorities wanted to question him about taxes that TPG might owe on a lucrative deal involving a big department-store chain. The Australians had even tried to freeze the firm's accounts, but the money was already winging its way to the Cayman Islands and Luxembourg. (Australia never did get the money and later lost in litigation.)
And then there's Russia. TPG had embraced investing in the country even as most private-equity rivals steered clear. Bonderman met with Putin in 2009 and joined the supervisory board of VTB after investing in the state-owned-bank. TPG took stakes in supermarket chain Lenta Ltd, a deal that soon turned violent after a disagreement with a shareholder over management, and transportation company Fesco.
The firm’s Moscow office at one point employed Alexander Vinokurov, who was recently added to the European Union sanctions list and is the son-in-law of Russian foreign minister Sergey Lavrov.
When Putin hosted his version of Davos in 2014 and 2015, Bonderman attended, even after Leon Panetta, former director of the CIA, asked him not to go. Coulter — who would have preferred not to conduct business in the country — stayed behind, a person with knowledge of the matter said.
TPG is now out of Russia, with no active employees or direct investments, according to a spokesman for the firm. TPG exited the Lenta investment in 2019 when it sold its stake to Russian billionaire Alexey Mordashov, liquidated its Fesco position the next year and recently closed the Moscow office.
Winkelried came onboard just months after the 2015 Russia conference. He had spent three decades at Goldman Sachs, much of that time with Paulson, as the bank transformed itself from Wall Street’s last great private partnership into a public company. He then stunned Wall Street by abruptly retiring at the peak of his career, at the age of 49, and heading west, to his ranch in Colorado.
Once there Winkelried developed near-professional level skills in horse cutting, a rodeo sport in which the rider separates a calf from a herd of cattle. He is also said to be an accomplished bowhunter – a sport, colleagues say, befitting his hard-edged style.
Waxman, another Goldman veteran, lured Winkelried to TPG as an adviser. Winkelried was named co-CEO with Coulter in 2015 and since then has expanded focus in areas such as healthcare and digital media. He’s also found new sources of capital for TPG — 30% of investor commitments in current funds are from relationships developed over the past five years, according to filings.
As the likes of Bonderman, Schwarzman, Leon Black and Henry Kravis sometimes begrudgingly make way for a new generation, private equity is evolving into a new, corporate version of itself. It may still be blood-sport capitalism. But public shareholders demand discipline and accountability in addition to profits.
TPG’s stock price has held up in the face of a wild run in the stock market. Priced at $29.50, it’s now trading around that level after slipping 2.4% on Monday at 12:49 p.m. At that price TPG has a market value of $9.1 billion, although a fraction of Blackstone’s $146 billion.
Still, TPG brass have made a fortune. Winkelried now shares a 51% economic interest in TPG, along with Bonderman, Coulter and other senior leaders, a stake worth billions.
While Coulter, as executive chairman, will focus mostly on key investors and impact initiatives from here, Bonderman has already stepped back.
His $4.5 billion family office, Wildcat Capital Management, has investments ranging from fertility clinics to car washes. But so much of his wealth was tied up in TPG that taking the company public unshackled him, making it easier to sell his shares when he chooses.
And Bondo – the rock n’ roll fan who so distains taxes that for years he kept his official residence in Texas, where he spent virtually no time – got one last mic drop. Thanks to a blip in the tax code, TPG's initial public offering lets the firm reduce taxes on its assets in the future. Filings show it plans to give about 85% of those savings, an estimated $1.4 billion, to the company's pre-IPO owners – that is, people such as Bondo.
This article was provided by Bloomberg News.
