Private equity company, TPG Capital, launched the first major initial public offering this year. The company, formerly known as Texas Pacific Group, listed its shares on the NASDAQ on Thursday. The stock surged by more than 15.25% during its stock market debut.
The IPO valued the 30-year-old company at around $10.4 billion, right around its initial target when it first announced its intention of going public back in June last year. TPG priced its stock at $29.50 per share, the midpoint of its announced price range of between $28 and $31 per share.
TPG's first-day trading success is an encouraging signal for the IPO market as a whole. About two out of every three traditional IPOs in 2021 were trading below their IPO prices by December. The class of IPOs had declined 17% on average from their offer prices as of this week.
TPG Executive Chairman Jim Coulter, who also co-founded the company, said that theirs is an "old-style" IPO that is not dependent on online trends and so-called meme stocks. He added that their listing is that of long-term positioning and quality.
TPG's IPO is the first major stock market debut of the year, and investors are sure to be keeping a close eye on it to see how well the market is recovering.
The company said that going public will help it with its future growth plans. TPG said it would use some of the funds it generated from the IPO to acquire new companies. It added that some funds would also be used to buy out the minority shares of some investors.
Over the last year, rivals like Blackstone and KKR had outperformed the S&P 500, though TPG officials claim they began preparing the IPO before those companies surged.
Analysts said that TPG still has to prove that it can grow given its relatively smaller size compared to its peers. TPG currently manages around $109 billion in assets, a fraction of the $731 billion handled by Blackstone. Analysts said TPG is also still too dependent on traditional leveraged buyouts for revenue.
To TPG's credit, executives claim that it was one of the first to enter growth equity, with early investments in Uber and Airbnb, and that it was ahead of the curve on ESG, with positive returns overall.
A list of high-profile corporations, including Chobani and Reddit, have filed papers with the Securities and Exchange Commission but have yet to publicly pitch their shares to investors.