By Kannaki Deka
(Reuters) -U.S. private equity firm TPG Inc will buy alternative investment firm Angelo Gordon in a deal valued at $2.7 billion, as it looks to expand into the credit market.
Major private equity firms have been looking to expand beyond their mainstay business as the equity funding market loses steam. Such companies are also strengthening their direct lending arms, which provide credit to businesses, to take advantage of high interest rates.
Analysts expect several private equity firms to step in to fill the gap left by regional banks, which have traditionally been crucial lenders to the commercial real estate industry but are now tightening their credit standards after the collapse of three U.S. banks this year.
TPG is looking to expand into credit investing since splitting from its credit arm Sixth Street in 2020 and said Angelo Gordon’s platform offers diversification in credit investing, including corporate credit, direct lending and structured credit.
Angelo Gordon, a New York-based investment company with focus on credit and real estate markets, has more than 650 employees across 12 offices in the United States, Europe, and Asia.
Upon the close of the transaction Angelo Gordon, founded in 1988, will become a new investing platform within TPG, the companies said in a statement on Monday.
TPG will buy Angelo Gordon in a cash and equity transaction, including an about $970 million in cash and up to 62.5 million common units of the TPG Operating Group and restricted stock units of TPG.
Angelo Gordon’s co-chief executives, Josh Baumgarten and Adam Schwartz, will become co-managing partners of the platform, reporting to TPG CEO Jon Winkelried.
TPG and Angelo Gordon had combined assets under management of $208 billion as of Dec. 31.
Ardea Partners LP acted as lead financial adviser to TPG, while Goldman Sachs & Co LLC and Piper Sandler advised Angelo Gordon.
(Reporting by Kannaki Deka and Niket Nishant in Bengaluru; Editing by Subhranshu Sahu and Maju Samuel)