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TPG’s New $3B Fund Is So Popular It Is Turning Money Away

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Private equity firm TPG is turning investors away from its new $3B opportunity fund because it is oversubscribed, according to IPE Real Estate.

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The New Mexico Educational Retirement Board wanted to put $50M into TPG Real Estate Partners III, but was only able to invest $40M because of the strong interest in the fund, IPE said.

San Francisco-based TPG is a relative newcomer when it comes to private equity giants investing in real estate and raised its first fund in 2009. It raised $2B for TPG Real Estate Partners II in 2014, and as of March this year that fund had a 38.3% net internal rate of return, according to documents from the State of New Jersey Investment Council.

The real estate division is run by co-heads Kelvin Davis and Avi Banyasz. Among its recent deals was the sale of European logistics platform P3 to GIC for €2.4B ($2.7B) in 2016. TPG bought P3 alongside Canadian pension fund Ivanhoé Cambridge for around €700M in 2013.

In the U.S. in 2016 it teamed up with Phillips Edison Grocery Center REIT II to buy up to $750M of grocery-anchored shopping centres.

Its third fund will target acquisitions needing $100M to $300M of equity. The firm’s primary focus is building platforms and growing enterprise value rather than acquiring single assets and creating value only at the property level, according to New Jersey State.