Moody’s assigns TPG unit A3

Moody's Investors Service said it assigned an A3 long-term issuer rating to TPG Operating Group II, LP. The outlook for TPG is stable.

TPG bought Angelo Gordon on Nov. 1. The acquisition boosted TPG’s assets under management to $222 billion as of year-end 2023, a 64% increase over the prior year.

“The A3 rating reflects TPG's growing stream of fee-related earnings, solid investment track record, low leverage and healthy and expanding profit margins. Moody's notes that the rating is further supported by an earnings mix that is highly weighted to more stable management fees,” the agency said in a statement.

However, “Constraints on the rating include the following: TPG's modest but growing revenue scale relative to its rating; its still meaningful AUM concentration in traditional private equity; and the likelihood that the company could engage in M&A to diversify its business mix. The rating is further constrained by significant balance sheet risk, which is typical of alternative asset managers as measured by its low ratio of equity to balance sheet investments as well as its limited history as a public company,” Moody’s said.

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