Investors will be paying particular attention to the market today as investment company TPG (NASDAQ: TPG) makes its debut on Wall Street. The company is set to start trading later today in what many are calling a test of the IPO market.
2021 saw a record number of companies debut via IPO, but almost two-thirds of these businesses are now trading below their initial prices. TPG will be hoping to buck that trend only a day after software company Justworks postponed its IPO due to current market conditions.
What does TPG do?
TPG is a private equity firm. It specializes in managing investment funds centered around growth capital. The company also invests in venture capital, public equity, and leveraged buyouts in order to drive profits.
The San Francisco-based investment company currently manages over $109 billion in assets and has roughly 280 companies currently active across its various portfolios.
When can I buy TPG stock?
TPG will start trading today on the NASDAQ stock exchange. It will trade under the ticker symbol “TPG” and will be initially priced at $29.50 per share. This price sits at the mid-point of the expected range for its offering and will set the company’s value at $9 billion. 33.9 million shares will be made available, which would see TPG raise just over $1 billion from going public.
TPG has done a stellar job at growing its managed assets over the last number of years. Since 2016, assets have grown by 81% to a total of $109 billion in September 2021. The firm has also increased total revenue by 288% between the beginning of 2019 and the end of 2021, where it totaled $5.4 billion. Over the same period, net income increased by 599% to $5 billion.
TPG’s growth potential
TPG offers many beneficial qualities to investors. The company has a wide-ranging ecosystem that spans 30 countries. It offers 17 active products across five different platforms. This broad diversity allows the company to draw in revenue from multiple areas as opposed to being over-reliant on one.
The company has also put a particular focus on industries primed for high levels of growth. The technology and healthcare sectors account for 37% and 24% respectively of total invested capital since the beginning of 2018. Early specialization within these industries could give TPG an advantage in the future as they continue to grow.
The company is not without its risks, however. The company is heavily reliant on its senior leadership and chief investors. If the company is unable to retain this talent long-term it could have a devastating impact on its future.
The business’ revenue is also heavily linked to the fortunes of the market. In times of particular volatility, the company could suffer. This could lead to wild fluctuations in revenue that may present too much of a risk to potential shareholders.
TPG’s IPO will certainly give us all valuable insight into the current state of the market for debuting companies. An injection of capital could allow TPG to aggressively invest in order to generate large amounts of positive cash flow. Its performance over the next two quarters will be key in giving investors an idea of just how lucrative an opportunity TPG might be for the next number of years.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.