TPG Reports Fourth Quarter and Full Year 2023 Financial Results Year Ended December 31, 2023
TPG | 2 ▪ Completed strategic acquisition of Angelo Gordon on November 1, 2023 ▪ Total assets under management of $222 billion as of December 31, 2023, an increase of 64% compared to $135 billion as of December 31, 2022 ▪ GAAP net income attributable to TPG Inc. of $13 million for the fourth quarter ended December 31, 2023, with basic net income per share of Class A common stock of $0.16 ▪ Fee-Related Earnings of $226 million for the fourth quarter ended December 31, 2023, an increase of 62% year-over-year, resulting in a Fee-Related Earnings margin of 49% ▪ After-tax Distributable Earnings of $206 million (or $0.51 per share of Class A common stock) for the fourth quarter ended December 31, 2023 ▪ Dividend of $0.44 per share of Class A common stock for the fourth quarter ended December 31, 2023 San Francisco and Fort Worth, Texas – February 13, 2024 – TPG Inc. (NASDAQ: TPG), a leading global alternative asset management firm, reported its unaudited fourth quarter and full year 2023 results. TPG issued a full detailed presentation of its fourth quarter and full year ended December 31, 2023 results, which can be viewed through the Investor Relations section of TPG’s website at shareholders.tpg.com. “Our strong fourth quarter financial results marked the completion of an outstanding year for TPG. We are entering 2024 with significant momentum and have a number of levers to drive continued growth across our firm,” said Jon Winkelried, Chief Executive Officer. “Through both organic innovation and completing the acquisition of Angelo Gordon, we have substantially expanded the breadth of our business. We now manage more than $220 billion of assets across a broadly diversified set of strategies and continue to further our position as a scaled, differentiated investment firm.” Dividend TPG has declared a quarterly dividend of $0.44 per share of Class A common stock to holders of record at the close of business on February 23, 2024, payable on March 8, 2024. Conference Call TPG will host a conference call and live webcast at 11:00 am ET. It may be accessed by dialing (800) 245-3047 (US toll-free) or (203) 518-9765 (international), using the conference ID TPGQ423. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast will also be available and can be accessed through the Investor Relations section of TPG's website at shareholders.tpg.com. A webcast replay will be made available on the Events page in the Investor Relations section of TPG's website. Shareholder contact: Media contact: Gary Stein Luke Barrett 212-601-4750 415-743-1550 shareholders@tpg.com media@tpg.com TPG Reports Fourth Quarter and Full Year 2023 Results
TPG | 3 TPG Reports Fourth Quarter and Full Year 2023 Results About TPG TPG is a leading global alternative asset management firm, founded in San Francisco in 1992, with $222 billion of assets under management and investment and operational teams around the world. TPG invests across a broadly diversified set of strategies, including private equity, impact, credit, real estate, and market solutions, and our unique strategy is driven by collaboration, innovation, and inclusion. Our teams combine deep product and sector experience with broad capabilities and expertise to develop differentiated insights and add value for our fund investors, portfolio companies, management teams, and communities. Forward Looking Statements; No Offers; Non-GAAP Information This presentation may contain “forward-looking” statements based on the Company’s beliefs and assumptions and on information currently available to the Company. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, estimated operational metrics, business strategy and plans and objectives of management for future operations, including, among other things, statements regarding expected growth, future capital expenditures, fund performance, dividends and dividend policy, and debt service obligations. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the inability to recognize the anticipated benefits of the acquisition of Angelo Gordon; unexpected costs related to the integration of the Angelo Gordon business and operations; our ability to manage growth and execute our business plan; and regional, national or global political, economic, business, competitive, market and regulatory conditions, among various other risks discussed in the Company’s SEC filings. For the reasons described above, we caution you against relying on any forward-looking statements, which should be read in conjunction with the other cautionary statements included elsewhere in this presentation and risk factors discussed from time to time in the Company’s filings with the SEC, which can be found at the SEC’s website at http://www.sec.gov. Any forward-looking statement in this presentation speaks only as of the date of this presentation. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise any forward-looking statement after the date of this presentation, whether as a result of new information, future developments or otherwise, except as may be required by law. No recipient should, therefore, rely on these forward- looking statements as representing the views of the Company or its management as of any date subsequent to the date of the presentation. This presentation does not constitute an offer of any TPG Fund. Throughout this presentation, all current period amounts are preliminary and unaudited; totals may not sum due to rounding. See the Reconciliations and Disclosures Section of this presentation for reconciliations of Non-GAAP to the most comparable GAAP measures.
TPG | 4 On November 1, 2023, the Company acquired (the “Acquisition”) Angelo Gordon and certain of its affiliates (collectively, “Angelo Gordon” or “AG,” and after the Acquisition, “TPG Angelo Gordon” or “TPG AG”). Accordingly, the results of TPG Angelo Gordon included in our consolidated results of operations are from November 1, 2023 through December 31, 2023. This presentation includes unaudited pro forma condensed combined financial information giving effect to the Acquisition as if it had occurred on January 1, 2023. As a result, comparability of the pro forma information included in this presentation to prior financial data or future periods may be limited. The unaudited pro forma condensed combined financial information in this presentation is based on available information and upon assumptions that management believes are reasonable in order to reflect, on a pro forma basis, the effect of the Acquisition, the related borrowing under TPG’s revolving credit facility, and certain changes in compensation arrangements for TPG Angelo Gordon. The actual results reported by the combined company in periods following the Acquisition may differ materially from that reflected in this unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information is preliminary, is being furnished solely for informational purposes and is not necessarily indicative of the combined financial position or results of operations that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. It does not reflect potential revenue synergies or cost savings expected to be realized from the Acquisition. No assurance can be given that cost savings or synergies will be realized at all. The adjustments contained in the unaudited pro forma condensed combined financial information are based on currently available information and assumptions that TPG believes are reasonable. Such assumptions include, but are not limited to, the Class A common stock, par value $0.001 per share (“Class A Share”) price, and the preliminary purchase price allocation of TPG AG’s assets acquired and liabilities assumed based on fair value and estimated post-combination compensation expense. As the Acquisition Date was close to December, 31, 2023, the purchase accounting analysis is subject to subsequent adjustments that are identified through the measurement period, which is limited to one year from the Acquisition Date. The unaudited pro forma condensed combined financial information does not project TPG’s results of operations or financial position for any future period or date. See the Reconciliations and Disclosures Section of this presentation for a full comparison of actual to pro forma financial data and adjustment descriptions. Comparability Statement and Pro Forma Financial Information
Fourth Quarter and Full Year 2023 Results
TPG | 6 ▪ Net income of $42 million for 4Q’23 compared to 4Q’22 net loss of $10 million ▪ Net income attributable to TPG Inc. of $13 million for 4Q’23 compared to net income of $24 million in 4Q’22 GAAP Statements of Operations (Unaudited) Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. 1. Operating profit margin, defined as net income divided by total revenue, was (2.2%) for 4Q’22 and 4.3% for 4Q’23. On a full year basis, operating profit margin was (2.8%) for FY’22 and 1.0% for FY’23. ($ in thousands, except share and per share amounts) 4Q’22 4Q’23 FY’22 FY’23 Revenues Fees and other $ 350,179 $ 529,903 $ 1,246,635 $ 1,534,626 Capital allocation-based (loss) income 89,156 453,234 756,252 855,285 Total revenues 439,335 983,137 2,002,887 2,389,911 Expenses Compensation and benefits: Cash-based compensation and benefits 124,945 188,099 473,696 547,377 Equity-based compensation 153,514 205,813 627,714 654,922 Performance allocation compensation 41,949 319,028 416,556 591,676 Total compensation and benefits 320,408 712,940 1,517,966 1,793,975 General, administrative and other 93,447 171,561 368,915 482,574 Depreciation and amortization 8,361 23,446 32,990 47,673 Interest expense 6,506 14,800 21,612 38,528 Expenses of consolidated Public SPACs 769 — 3,316 1,053 Total expenses 429,491 922,747 1,944,799 2,363,803 Investment income (loss) Income (loss) from investments: Net (losses) gains from investment activities (19,286) (4,895) (110,131) 6,564 Interest, dividends and other 5,775 13,674 9,168 42,622 Investment income of consolidated Public SPACs: Unrealized gains on derivative liabilities of Public SPACs 667 — 12,382 667 Interest, dividends and other 2,201 — 6,741 7,692 Total investment income (loss) (10,643) 8,779 (81,840) 57,545 (Loss) income before income taxes (799) 69,169 (23,752) 83,653 Income tax expense 8,949 26,757 32,483 60,268 Net (loss) income(1) (9,748) 42,412 (56,235) 23,385 Net loss attributable to redeemable equity in Public SPACs prior to Reorganization and IPO — — (517) — Net income attributable to other non-controlling interests prior to Reorganization and IPO — — 966 — Net income attributable to TPG Group Holdings prior to Reorganization and IPO — — 5,256 — Net income attributable to redeemable equity in Public SPACs 1,962 — 15,165 12,044 Net loss attributable to non-controlling interests in TPG Operating Group (40,145) 7,943 (180,824) (92,411) Net (loss) income attributable to other non-controlling interests 4,794 21,296 11,293 23,662 Net income attributable to TPG Inc. subsequent to Reorganization and IPO $ 23,641 $ 13,173 $ 92,426 $ 80,090 Net income (loss) per share data: Net income (loss) available to Class A common stock per share Basic $ 0.28 $ 0.16 $ 1.10 $ 0.89 Diluted $ (0.03) $ 0.04 $ (0.19) $ (0.04) Weighted-average shares of Class A common stock outstanding Basic 79,272,036 80,665,902 79,255,411 80,334,871 Diluted 308,924,677 343,887,011 308,908,052 317,944,496
TPG | 7 Operating Metrics ($B) Non-GAAP Financial Measures ($M) Fourth Quarter and Full Year Highlights 4Q’22 4Q’23 FY’22 FY’23 Fee-Related Revenues ("FRR") $307 $465 $1,086 $1,337 Fee-Related Earnings (“FRE”) 139 226 454 606 Realized Performance Allocations, Net 95 19 282 74 After-Tax Distributable Earnings (“After-tax DE”) 227 206 700 585 4Q’22 3Q’23 4Q’23 Assets Under Management (“AUM”) $135.0 $136.1 $221.6 Fee Earning Assets Under Management (“FAUM”) 77.9 78.9 136.8 Net Accrued Performance 0.6 0.7 0.9 Available Capital 43.0 38.2 51.3 4Q’22 4Q’23 FY’22 FY’23 Capital Raised $3.6 $8.8 $30.0 $15.7 Capital Invested 5.7 11.6 16.6 22.2 Realizations 3.8 2.7 14.0 10.2 ▪ 4Q’23 FRR of $465 million increased 51% versus 4Q’22, with 4Q’23 FRE of $226 million and 4Q’23 After- tax DE of $206 million ▪ Total AUM of $222 billion, up 64% in the last twelve months; Fee Earning AUM of $137 billion, up 76% during the same period Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. See the Reconciliations and Disclosures Section of this presentation for a full reconciliation of Non-GAAP to the most comparable GAAP measures and adjustment descriptions. ▪ 4Q’23 and FY’23 results include two months of TPG AG, from November 1, 2023, the date of the Acquisition, to December 31, 2023
TPG | 8 Non-GAAP Financial Measures ▪ FRE increased 62% from $139 million in 4Q’22 to $226 million in 4Q’23; FRE margin increased to 49% in 4Q’23 compared to 45% in 4Q’22 ▪ After-tax DE of $206 million in 4Q’23, a decrease from $227 million in 4Q’22, primarily due to a decrease in realized performance allocations, net year-over-year, as well as higher non-core expenses associated with the Acquisition, partially offset by an increase in FRE ▪ 4Q’23 and FY’23 results include two months of TPG AG, from November 1, 2023, the date of the Acquisition, to December 31, 2023 Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. See the Reconciliations and Disclosures Section of this presentation for a full reconciliation of Non-GAAP to the most comparable GAAP measures and adjustment descriptions. 1. Realized investment income and other, net includes activity considered non-core to our Fee-Related Earnings operations, including expenses of $18 million in 4Q’23 and $53 million in FY’23 related to the Acquisition. ($ in thousands) 4Q’22 4Q’23 FY’22 FY’23 Fee-Related Revenues Management fees $ 249,933 $ 395,608 $ 929,860 $ 1,178,721 Fee-related performance revenues — 1,642 5,182 1,642 Transaction, monitoring and other fees, net 46,245 55,285 103,896 107,713 Other income 11,131 12,192 47,069 49,178 Fee-Related Revenues 307,308 464,727 1,086,007 1,337,254 Fee-Related Expenses Cash-based compensation and benefits, net 102,476 156,622 392,968 452,270 Fee-related performance compensation — 1,401 — 1,401 Operating expenses, net 65,981 81,153 239,189 277,252 Fee-Related Expenses 168,457 239,176 632,157 730,923 Fee-Related Earnings 138,853 225,551 453,850 606,331 Realized performance allocations, net 95,039 18,996 282,383 74,027 Realized investment income and other, net(1) 19,638 (24,976) 42,038 (47,241) Depreciation expense (1,270) (3,010) (4,590) (6,589) Interest expense, net (1,033) (1,088) (13,795) 1,401 Distributable Earnings 251,227 215,473 759,886 627,929 Income taxes (24,681) (9,826) (59,623) (42,623) After-Tax Distributable Earnings $ 226,546 $ 205,647 $ 700,263 $ 585,306
TPG | 9 $930 $1,179 $383 $514 $142 $155$180 $201 $50 $34 $154 $150 $71 $74 FY’22 FY’23 $250 $396 $108 $161 $37 $43 $47 $54 $50 $34 $40 $35 $17 $19 4Q’22 4Q’23 ▪ 4Q’23 FRR increased 51% over 4Q’22, primarily driven by the Acquisition, catch-up management fees, and an increase in capital markets fees ▪ Fee-Related Expenses in 4Q’23 increased 42% over 4Q’22, primarily due to the addition of TPG AG ▪ 4Q’23 FRE margin of 49%, an increase from 45% in 4Q’22; FY’23 FRE margin of 45% Fee-Related Earnings Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. See the Reconciliations and Disclosures Section of this presentation for reconciliations of Non-GAAP to the most comparable GAAP measures and adjustment descriptions. 1. Catch-up management fees totaled $49 million and $2 million for 4Q’23 and 4Q’22, respectively. Fee-Related Earnings Management Fees by Platform(1) ($M) ($M) +58% Capital Growth Impact TPG AG Credit +27% $139 $226 4Q’22 4Q’23 $454 $606 FY’22 FY’23 TPG AG Real Estate Real Estate Market Solutions
TPG | 10 $227 $206 4Q’22 4Q’23 $700 $585 FY’22 FY’23 Distributable Earnings ▪ After-tax DE decreased from $227 million in 4Q’22 to $206 million for 4Q’23, primarily due to less realized performance allocations, net year-over-year, as well as higher non-core expenses associated with the Acquisition, partially offset by an increase in FRE After-Tax DE ($M) Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. See the Reconciliations and Disclosures Section of this presentation for reconciliations of Non-GAAP to the most comparable GAAP measures and adjustment descriptions. Distributable Earnings Mix FRE All Other Sources of Pre-tax DE 76% 24% 105% 3Q’23 4Q’23
TPG | 11 Capital $5 Growth $1 TPG AG Credit $6 TPG AG Real Estate $— Market Solutions $7 Capital $55 Growth $2 Impact $1 TPG AG Credit $6 TPG AG Real Estate $— Real Estate $4 Market Solutions $7 ▪ Realized performance allocations, net were $19 million in 4Q’23, primarily driven by TPEP in the Market Solutions platform, TPG VIII in the Capital platform, and MVP Fund in TPG AG Credit ▪ Realized performance allocations, net for FY’23 were $74 million, primarily driven by TPG AAF and TPG VIII in the Capital platform and TPEP in the Market Solutions platform Realized Performance Allocations, Net 4Q’23 Realized Performance Allocations, Net FY’23 Realized Performance Allocations, Net ($M) ($M) Total $74 Total $19 Capital Growth Impact TPG AG Credit TPG AG Real Estate Real Estate Market Solutions <1 <1 Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023.
TPG | 12 $404 $185 $107 $59 $97 $12 $27 Capital Growth Impact TPG AG Credit TPG AG Real Estate Real Estate Market Solutions Net Accrued Performance Net Accrued Performance by Fund Vintage ($M) 3Q’23 4Q’23 2017 & Prior $314 $363 2018 43 77 2019 225 269 2020 81 104 2021 20 56 2022 9 22 Total $692 $891 4Q’23 Net Accrued Performance Total $891 ($M) $692 +$141 +$77 ($19) $891 3Q’23 Acquisition Value Creation & Other Realized Gains 4Q’23 4Q’23 Net Accrued Performance Walk ($M) Investment Appreciation / (Depreciation) Platform 4Q’23 FY’23 Capital 3.1% 8.2% Growth 3.0% 5.9% Impact 6.6% 17.0% TPG AG TPG AG Credit 3.8% 14.1% TPG AG Real Estate 0.4% (0.3%) Real Estate (1.5%) (2.8%) Market Solutions(1) (0.8%) 5.5% Loan Level Return CLOs 4Q’23 FY’23 U.S. CLOs 4.1% 15.2% European CLOs 2.9% 13.0% Note: Investment Appreciation / (Depreciation) for TPG AG and Loan Level Returns cover October 2023 to December 2023 for 4Q’23 and January 2023 to December 2023 for FY’23 1. Due to the nature of their strategy, Appreciation / (Depreciation) in the Market Solutions platform above includes information for certain funds as of September 30, 2023. Accordingly, those funds’ performance information does not reflect any fund activity for the quarter ended December 31, 2023 and therefore does not cover the same period presented for other funds. Any activity occurring during the quarter ended December 31, 2023 will be reflected in the performance information presented in future reporting.
TPG | 13 GAAP Balance Sheet (Unaudited) ▪ Our investments increased $1.4 billion from 4Q'22 to 4Q’23, mainly driven by the addition of $761 million of performance allocations attributable to TPG AG at November 1, 2023, the date of the Acquisition ▪ Cash decreased to $0.7 billion at the end of 4Q’23 primarily due to the Acquisition of TPG AG 1. Includes TPG Inc. Class A and B common stock as well as additional paid-in-capital and retained earnings. ($ in thousands) 4Q’22 4Q’23 Assets Cash and cash equivalents $ 1,107,484 $ 665,188 Investments 5,329,868 6,724,112 Other assets 478,816 894,785 Intangible assets and goodwill 366,381 1,085,587 Assets of consolidated Public SPACs 659,189 — Total assets 7,941,738 9,369,672 Liabilities, redeemable equity and equity Liabilities Debt obligations 444,566 945,052 Accrued performance allocation compensation 3,269,889 4,096,052 Other liabilities 464,124 967,434 Liabilities of consolidated Public SPACs 23,653 — Total liabilities 4,202,232 6,008,538 Redeemable equity attributable to consolidated Public SPACs 653,635 — Equity TPG Inc.(1) 509,672 579,157 Other non-controlling interests 2,576,199 2,781,977 Total equity 3,085,871 3,361,134 Total liabilities, redeemable equity and equity $ 7,941,738 $ 9,369,672
TPG | 14 Non-GAAP Balance Sheet ▪ Cash and cash equivalents of $105 million at the end of 4Q’23 ▪ At the end of 4Q’23, our net debt(1) was $846 million and our undrawn credit facility capacity was $699 million(2) ▪ Our borrowings include $501 million drawn on our revolving credit facility, securitized notes with a principal amount of $250 million (which are backed by $649 million in pledged assets as of 4Q’23), and a senior unsecured term loan with a principal amount of $200 million that was issued as part of the Reorganization See the Reconciliations and Disclosures Section of this presentation for reconciliations of Non-GAAP to the most comparable GAAP measures and adjustment descriptions. 1. Net debt comprised of $951 million in debt principal less $105 million of cash and cash equivalents. 2. In the fourth quarter of 2023, we drew $470 million under our credit facility to partially fund the cash consideration of the Acquisition, and an additional $31 million for working capital purposes. ($ in thousands) 4Q’22 4Q’23 Book Assets Cash and cash equivalents $ 691,687 $ 105,480 Net accrued performance 642,519 891,455 Investments in funds 576,814 877,802 Intangible assets and goodwill 274,481 1,007,899 Other assets 314,926 679,638 Total Book Assets 2,500,427 3,562,274 Book Liabilities Accounts payable, accrued expenses and other 48,183 296,147 Debt obligations 444,566 945,052 Total Book Liabilities 492,749 1,241,199 Net Book Value $ 2,007,678 $ 2,321,075
Operating Metrics
TPG | 16 $78 $137 $35 $39 $11 $12 $13 $14 $40 $14 $13 $11 $6 $6 4Q’22 4Q’23 $135 $222 $66 $71 $23 $27 $16 $19 $60 $18 $20 $18 $10 $9 4Q’22 4Q’23 Assets Under Management and Fee Earning AUM ▪ 4Q’23 AUM rose 64% over 4Q’22 to $221.6 billion, primarily driven by the inclusion of TPG AG following the Acquisition ▪ Over the last twelve months, capital raised totaled $15.7 billion, including $3.1 billion in TPG IX and $1.6 billion in THP II within the Capital platform; realizations totaled $10.2 billion over the same period ▪ 4Q’23 FAUM increased 76% over 4Q’22 to $136.8 billion, primarily due to the Acquisition Assets Under Management Fee Earning AUM ($B) ($B) +64% +76% Capital Growth Impact TPG AG Credit TPG AG Real Estate Real Estate Market Solutions Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023.
TPG | 17 24% 38% 28% 2% 9% 1% 21% 64% 5% 8% 1% 25% 63% 2% 9% FAUM by Remaining Duration Assets Under Management and Fee Earning AUM Duration AUM by Duration at Inception For the grouping of years on duration, 0-4 Years represents a term equal to 4 years or less; 5-9 Years represents a term greater than 4 and less than or equal to 9; 10+ Years represents a term greater than 9. 1. Defined as the number of years between fund activation and contractual fund winddown, prior to any extensions, as of December 31, 2023. 2. Defined as the number of years between December 31, 2023 and contractual fund winddown, prior to any available extensions. ▪ At the end of 4Q’23, approximately 69% of our AUM and 65% of our FAUM was in perpetual or long-dated funds with a duration(1) of 10 or more years (prior to any available extensions) ▪ At the end of 4Q’23, approximately 68% of our FAUM had a remaining lifespan(2) of 5 or more years, with 30% in vehicles that have 10 or more years remaining (including those considered perpetual) Total $222B Total $137B FAUM by Duration at Inception Total $137B ~65% ~68%~69% 0-4 Years 5-9 Years 10+ Years Perpetual Capital Subject to Periodic Redemption
TPG | 18 Capital $1.6 TPG AG Credit $6.4 TPG AG Real Estate $2.4 Capital $2.4 Growth $3.0 Impact $0.2 TPG AG Credit $3.7 TPG AG Real Estate $1.2 Real Estate $2.7 Market Solutions $0.8 ▪ AUM Subject to Fee Earning Growth totaled $24.4 billion at the end of 4Q’23 and includes AUM Not Yet Earning Fees (capital commitments that generate new management fees once deployed) and FAUM Subject to Step-Up (capital commitments that generate a higher rate of management fees as deployed or over time) ▪ At the end of 4Q’23, our AUM Subject to Fee Earning Growth represents 18% of FAUM and the potential fee-related revenue opportunity associated with both AUM Not Yet Earning Fees and FAUM Subject to Step-Up is estimated at approximately $132 million annually(1) AUM Not Yet Earning Fees FAUM Subject to Step-Up ($B) ($B) Total $14 Total $10 AUM Subject to Fee Earning Growth 1. Represents the sum of the gross revenue opportunity for each fund with AUM Subject to Fee Earning Growth. For AUM Not Yet Earnings Fees, this is calculated as the incremental amount of uncalled capital that would be called to achieve an expected range of total deployment, factoring in leverage where applicable, multiplied by the fee rate that we anticipate would be earned on such capital. For FAUM Subject to Step Up, this is calculated as the increase to management fees from either (i) certain funds whose fee rates increase as capital is deployed or (ii) certain funds where fee rates increase for certain investors over the life of the fund. Capital Growth Impact TPG AG Credit TPG AG Real Estate Real Estate Market Solutions
TPG | 19 Capital $57.7 Growth $17.6 Impact $13.8 TPG AG Credit $42.0 TPG AG Real Estate $9.5 Real Estate $3.9 Market Solutions $6.3 Capital $58.0 Growth $22.5 Impact $17.5 TPG AG Credit $50.2 TPG AG Real Estate $18.3 Real Estate $17.7 Market Solutions $7.6 ▪ Performance Eligible AUM refers to AUM that is currently producing, or may eventually produce, performance revenues, and totaled $191.8 billion, or 87% of total AUM, at the end of 4Q’23 ▪ Performance Generating AUM refers to AUM that is currently producing performance revenues, and totaled $150.8 billion, or 68% of total AUM, at the end of 4Q’23 Performance Eligible AUM Performance Generating AUM ($B) ($B) Total $192 Total $151 Performance Eligible and Generating AUM Capital Growth Impact TPG AG Credit TPG AG Real Estate Real Estate Market Solutions
TPG | 20 AUM Rollforward Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. 1. Represents AUM of TPG Angelo Gordon as of November 1, 2023. 2. Outflows represent redemptions and withdrawals. 3. Changes in investment value and other consists of changes in fair value, capital invested, available capital, and net asset value of our hedge funds, plus other investment activities including MITT’s acquisition of the assets of Western Asset Mortgage Capital Corporation amounting to $1.2 billion during December 2023. ▪ AUM increased 63% during 4Q’23 and $86.6 billion, or 64%, in the last twelve months ▪ The AUM increase in 4Q’23 was primarily driven by the inclusion of TPG AG following the Acquisition; capital raised totaled $8.8 billion while realizations were $2.7 billion ▪ AUM growth for the last twelve months was primarily driven by the Acquisition plus $15.7 billion of capital raised, including $9.0 billion in the Capital platform and $2.7 billion in the Growth platform, partially offset by $10.2 billion of realizations Three Months Ended December 31, 2023 TPG Angelo Gordon ($ in millions) Capital Growth Impact Credit Real Estate Real Estate Market Solutions Total AUM Balance as of Beginning of Period $ 67,103 $ 23,819 $ 17,984 $ — $ — $ 18,280 $ 8,943 $ 136,129 Acquisition(1) — — — 57,390 17,915 — — 75,305 Capital Raised 4,624 2,039 320 694 370 737 57 8,841 Realizations (700) (234) (56) (641) (293) (651) (137) (2,712) Outflows(2) — — — (29) — — (717) (746) Changes in Investment Value and Other(3) 283 892 831 2,218 276 (426) 732 4,806 AUM as of end of period $ 71,310 $ 26,516 $ 19,079 $ 59,631 $ 18,268 $ 17,940 $ 8,879 $ 221,623 Twelve Months Ended December 31, 2023 TPG Angelo Gordon ($ in millions) Capital Growth Impact Credit Real Estate Real Estate Market Solutions Total AUM Balance as of Beginning of Period $ 66,392 $ 23,138 $ 16,429 $ — $ — $ 19,503 $ 9,571 $ 135,034 Acquisition(1) — — — 57,390 17,915 — — 75,305 Capital Raised 9,047 2,673 1,047 694 370 994 918 15,743 Realizations (6,271) (750) (301) (641) (293) (1,703) (275) (10,234) Outflows(2) — — — (29) — — (1,106) (1,135) Changes in Investment Value and Other(3) 2,141 1,455 1,904 2,218 276 (855) (227) 6,910 AUM as of end of period $ 71,310 $ 26,516 $ 19,079 $ 59,631 $ 18,268 $ 17,940 $ 8,879 $ 221,623
TPG | 21 FAUM Rollforward Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. 1. Represents FAUM of TPG Angelo Gordon as of November 1, 2023. 2. Fee earning capital raised represents capital raised by our funds for which management fees calculated based on commitments were activated during the period. 3. Net change in investment activity includes capital called or invested during the period, net of return of capital distributions and changes in net asset value of hedge funds. It also includes adjustments related to funds with a fee structure based on the lower of cost or fair value. 4. Outflows represent redemptions and withdrawals. 5. Reduction in fee base represents decreases in the fee basis for funds where the investment or commitment fee period has expired, and the fee base has reduced from commitment base to actively invested capital. It also includes reductions for funds that are no longer fee paying. ▪ FAUM increased 73% in 4Q’23 and 76% in the last twelve months ▪ FAUM growth in 4Q’23 was primarily driven by the inclusion of TPG AG following the Acquisition, with fee earning capital raised totaling $5.0 billion and a net increase in investment activity of $2.6 billion ▪ In the last twelve months, FAUM increases were primarily driven by the Acquisition and fee earning capital raised of $9.0 billion, partially offset by reductions in fee bases of certain funds totaling $2.4 billion Three Months Ended December 31, 2023 TPG Angelo Gordon ($ in millions) Capital Growth Impact Credit Real Estate Real Estate Market Solutions Total FAUM Balance as of Beginning of Period $ 36,342 $ 11,388 $ 13,359 $ — $ — $ 11,612 $ 6,244 $ 78,944 Acquisition(1) — — — 38,319 13,305 — — 51,624 Fee Earning Capital Raised(2) 2,650 1,184 712 146 253 5 56 5,006 Net Change in Investment Activity(3) (20) 78 32 1,565 477 (319) 823 2,636 Outflows(4) — — — (25) — — (704) (729) Reduction in Fee Base of Certain Funds(5) — (310) (376) — — — — (687) FAUM as of end of period $ 38,972 $ 12,339 $ 13,727 $ 40,005 $ 14,035 $ 11,298 $ 6,419 $ 136,794 Twelve Months Ended December 31, 2023 TPG Angelo Gordon ($ in millions) Capital Growth Impact Credit Real Estate Real Estate Market Solutions Total FAUM Balance as of Beginning of Period $ 35,371 $ 10,830 $ 12,739 $ — $ — $ 13,324 $ 5,681 $ 77,945 Acquisition(1) — — — 38,319 13,305 — — 51,624 Fee Earning Capital Raised(2) 5,319 1,449 1,124 146 253 23 690 9,005 Net Change in Investment Activity(3) (1,718) 370 240 1,565 477 (346) 1,132 1,719 Outflows(4) — — — (25) — — (1,085) (1,109) Reduction in Fee Base of Certain Funds(5) — (310) (376) — — (1,703) — (2,389) FAUM as of end of period $ 38,972 $ 12,339 $ 13,727 $ 40,005 $ 14,035 $ 11,298 $ 6,419 $ 136,794
TPG | 22 Other Operating Metrics Capital Raised 4Q’22 4Q’23 FY’22 FY’23 Capital $ 721 $ 4,624 $ 15,319 $ 9,047 Growth 1,570 2,039 2,207 2,673 Impact 821 320 3,616 1,047 TPG AG TPG AG Credit — 694 — 694 TPG AG Real Estate — 370 — 370 Real Estate 105 737 7,295 994 Market Solutions 414 57 1,587 918 Total $ 3,631 $ 8,841 $ 30,024 $ 15,743 ▪ At the end of 4Q’23, we had $51.3 billion of capital available for deployment; we have invested approximately $22.2 billion during the year Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. Available Capital 4Q’22 4Q’23 Capital $ 19,759 $ 17,056 Growth 4,211 5,021 Impact 7,697 4,761 TPG AG TPG AG Credit — 7,087 TPG AG Real Estate — 7,344 Real Estate 8,193 8,370 Market Solutions 3,098 1,683 Total $ 42,958 $ 51,322 Capital Invested 4Q’22 4Q’23 FY’22 FY’23 Capital $ 3,828 $ 4,464 $ 6,250 $ 9,988 Growth 989 1,267 3,123 2,198 Impact 366 1,946 3,667 3,909 TPG AG TPG AG Credit — 3,081 — 3,081 TPG AG Real Estate — 322 — 322 Real Estate 415 438 2,954 1,840 Market Solutions 149 67 559 879 Total $ 5,747 $ 11,585 $ 16,553 $ 22,217 Realizations 4Q’22 4Q’23 FY’22 FY’23 Capital $ 3,115 $ 700 $ 9,782 $ 6,271 Growth 291 234 2,223 750 Impact 81 56 548 301 TPG AG TPG AG Credit — 641 — 641 TPG AG Real Estate — 293 — 293 Real Estate 242 651 1,060 1,703 Market Solutions 43 137 404 275 Total $ 3,772 $ 2,712 $ 14,017 $ 10,234 (All tables in $M)
Supplemental Details
TPG | 24 GAAP and Non-GAAP Performance Allocations Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. 1. Includes certain TPG Operating Group Excluded entities whose performance allocations are not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us. We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022. 2. Non-GAAP adjustments represent the exclusion of performance allocations that are not attributable to the TPG Operating Group Common Unit holders. Three Months Ended December 31, 2023 GAAP Less: GAAP GAAP Less: Non-GAAP Non-GAAP ($ in thousands) Total(1) Unrealized Realized Adjustments(2) Realized Capital $ 171,443 $ 145,373 $ 26,070 $ 20,616 $ 5,454 Growth 87,324 82,371 4,953 3,911 1,042 Impact 101,429 101,429 — — — TPG AG TPG AG Credit 139,365 56,128 83,237 77,685 5,552 TPG AG Real Estate (12,038) (13,912) 1,874 1,485 389 Real Estate (49,828) (49,828) — — — Market Solutions (7,421) (40,218) 32,797 26,238 6,559 Total $ 430,274 $ 281,343 $ 148,931 $ 129,935 $ 18,996 Year Ended December 31, 2023 GAAP Less: GAAP GAAP Less: Non-GAAP Non-GAAP ($ in thousands) Total(1) Unrealized Realized Adjustments(2) Realized Capital $ 390,428 $ (5,857) $ 396,285 $ 341,771 $ 54,514 Growth 112,326 68,438 43,888 41,750 2,138 Impact 229,611 225,839 3,772 2,973 799 TPG AG TPG AG Credit 139,365 56,128 83,237 77,685 5,552 TPG AG Real Estate (12,038) (13,912) 1,874 1,485 389 Real Estate (74,683) (95,061) 20,378 16,302 4,076 Market Solutions 23,239 (9,558) 32,797 26,238 6,559 Total $ 808,248 $ 226,017 $ 582,231 $ 508,204 $ 74,027
TPG | 25 GAAP and Non-GAAP Net Accrued Performance As of September 30, 2023 ($ in millions) Capital Growth Impact Real Estate Market Solutions Total GAAP Total $ 2,541 $ 1,337 $ 441 $ 175 $ 131 $ 4,625 Less: Excluded Assets(1) 55 255 — 60 — 370 Less: Non-GAAP Adjustments(2) 2,111 910 354 92 96 3,563 Non-GAAP Total $ 375 $ 172 $ 87 $ 23 $ 35 $ 692 1. The TPG Operating Group Excluded entities’ performance allocations are not a component of net income attributable to TPG following the Reorganization; however, the TPG general partner entities continue to be consolidated by us. We transferred the rights to the performance allocations the TPG Operating Group historically would have received to RemainCo on December 31, 2021. As such, net income available to controlling interest holders will be zero for each of the TPG Operating Group Excluded entities beginning January 1, 2022. 2. Non-GAAP adjustments represent the exclusion of performance allocations that are not attributable to the TPG Operating Group Common Unit holders. As of December 31, 2023 TPG Angelo Gordon ($ in millions) Capital Growth Impact Credit Real Estate Real Estate Market Solutions Total GAAP Total $ 2,683 $ 1,420 $ 542 $ 294 $ 510 $ 125 $ 91 $ 5,665 Less: Excluded Assets(1) 59 268 — — — 67 — 394 Less: Non-GAAP Adjustments(2) 2,220 967 435 235 413 46 64 4,380 Non-GAAP Total $ 404 $ 185 $ 107 $ 59 $ 97 $ 12 $ 27 $ 891
TPG | 26 After-Tax DE and Dividends Per Class A Common Stock ▪ After-tax DE attributable to TPG Inc. of $0.51 per share for 4Q’23, and $1.57 per share for FY’23 ▪ Declared dividend of $0.44 per share for 4Q’23 on February 13, 2024, with a record date of February 23, 2024 and payable date of March 8, 2024; dividends declared total $1.34 per share for FY’23 ($ in thousands, except share and per share amounts) 3Q’23 4Q’23 Share Reconciliation Class A common stock from IPO 79,070,565 79,070,565 Vested restricted stock units(1) 525,936 2,950,733 Exchange of Common Units to Class A common stock 1,000,000 1,000,000 Class A common stock outstanding 80,596,501 83,021,298 ($ in thousands, except share and per share amounts) 3Q’23 4Q’23 After-Tax Distributable Earnings attributable to TPG Inc. Class A common stockholders Pre-Tax Distributable Earnings $ 206,586 $ 215,473 Less: subsidiary-level income taxes(2) (3,052) (816) Distributable Earnings before corporate income taxes 203,534 214,657 Percent to TPG Inc.(3) 26% 24% TPG Inc. Distributable Earnings before corporate income taxes 53,045 51,668 Less: corporate income taxes attributable to TPG Inc.(2) (7,955) (9,011) TPG Inc. After-tax Distributable Earnings 45,090 42,657 Class A common stock outstanding 80,596,501 83,021,298 TPG Inc. After-tax Distributable Earnings per Class A common stock 0.56 0.51 Target dividend policy 85% 85% Dividend per Class A common stock $ 0.48 $ 0.44 Note: TPG Inc. effective DE corporate income tax rate 15.0% 17.4% 1. For the purposes of calculating our per share metrics, periods shown include events that occurred after period end but prior to the relevant record date, such as Common Unit exchanges and restricted stock units that vested and settled, as they will be entitled to a dividend on the payable date. 2. Total income taxes consist of subsidiary-level income taxes at the TPG Operating Group level and corporate income taxes borne by TPG Inc. 3. As of December 31, 2023, TPG Inc. had a 22% ownership of TPG Operating Group; 24% reflects a weighted average of the quarter with certain transaction agreement adjustments related to the Acquisition. ($ in thousands) 3Q’23 4Q’23 Subsidiary-level income taxes $ 3,052 $ 816 Corporate income taxes 7,955 9,011 Total income taxes $ 11,007 $ 9,826
TPG | 27 Fee-Related Earnings Per Class A Common Stock ▪ FRE attributable to TPG Inc. of $0.65 per share for 4Q’23 and $1.88 per share for FY’23 ($ in thousands, except share and per share amounts) 3Q’23 4Q’23 Fee-Related Earnings attributable to TPG Inc. Class A common stockholders Total Fee-Related Earnings(1) $ 156,067 $ 225,551 Percent to TPG Inc.(2) 26% 24% TPG Inc. Fee-Related Earnings 40,674 54,290 Class A common stock outstanding(3) 80,596,501 83,021,298 TPG Inc. Fee-Related Earnings per Class A common stock $ 0.50 $ 0.65 1. Fee-Related Earnings does not include income tax expense. 2. As of December 31, 2023, TPG Inc. had a 22% ownership of TPG Operating Group; 24% reflects certain transaction agreement adjustments related to the Acquisition. 3. For the purposes of calculating our per share metrics, periods shown include events that occurred after period end but prior to the relevant record date, such as Common Unit exchanges and restricted stock units that vested and settled, as they will be entitled to a dividend on the payable date.
TPG | 28 Distributable Earnings Participating Shares Outstanding (shares) 3Q’23 4Q’23 TPG Inc. Diluted Shares Outstanding Class A common stock outstanding 80,587,371 80,596,501 Common Units exchangeable into Class A common stock(1) 228,652,641 281,657,626 Diluted Class A common stock outstanding 309,240,012 362,254,127 Restricted Stock Units ("RSUs") Special Purpose Awards: IPO Service Awards(2) 9,422,548 9,331,365 Acquisition Service Awards — 6,988,332 Executive Service Awards — 2,594,755 Ordinary Awards: Service Awards 4,400,817 4,478,010 Total Distributable Earnings participating shares outstanding(3) 323,063,377 385,646,589 For the purposes of calculating our Distributable Earnings participating shares outstanding, periods shown exclude events that occurred after period end, such as Common Unit exchanges and restricted stock units that vested and settled. 1. Includes 53 million vested and unvested Common Units issued to TPG Angelo Gordon partners in connection with the Acquisition. 2. Includes 70,691 RSUs that have vested but have not yet been settled. 3. Excludes Executive Market Condition and Ordinary Performance Condition Awards, which are not considered participating as they either accrue dividends to be paid only upon vesting or do not participate in dividends.
TPG | 29 Equity-Based Compensation Summary ($ in millions, except for share and per share amounts, as of December 31, 2023) Category Units Outstanding Compensation Expense QTD Compensation Expense YTD Unrecognized Compensation Expense Remaining Recognition Period(1) Other Awards: Legacy Equity, IPO-Related and Acquisition Awards(2) N/A $ 156.2 $ 521.3 $ 2,090.2 2.0 - 5.0 years Restricted Stock Units: IPO Service Awards(3) 9,331,365 15.9 61.0 158.6 2.7 years Acquisition Service Awards 6,988,332 12.8 12.8 189.0 5.0 years Executive Service Awards 2,594,755 1.9 1.9 88.9 4.0 years Ordinary Service Awards 4,478,010 12.0 44.3 103.4 2.5 years Total 23,392,462 198.8 641.3 2,630.1 Less: Non-employee portion of Awards(4) (193,895) (0.8) (3.7) Add: Market / Performance Condition Awards(5) 5,129,419 5.1 9.8 Add: Other(6) 2.7 7.5 Total Statement of Operations Equity-based compensation $ 205.8 $ 654.9 1. Represents the weighted average remaining recognition period across outstanding Restricted Stock Unit grants. 2. Represents units granted in TPG Partner Holdings, RemainCo Partner Holdings, and other awards granted in conjunction with the IPO. Also includes unvested common units in TPG Operating Group granted in conjunction with the Acquisition. 3. Includes 70,691 Restricted Stock Units that have vested, but have not yet been settled. 4. Considered a General, Administrative and Other expense for GAAP purposes. 5. Market and Performance Condition Awards are not considered participating; these Awards either do not participate in dividends or accrue dividends only to be paid upon vesting. 6. Represents units granted in TPG RE Finance Trust, Inc. and AG Mortgage Investment Trust, Inc. ▪ Equity-based compensation related to TPG Inc. Ordinary Service Awards totaled $12 million in 4Q’23; the total unrecognized compensation expense related to these Awards amounted to $103 million at the end of 4Q’23, and is expected to be recognized over the next 2.5 years(1)
TPG | 30 Fund Performance Metrics These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performances metrics exclude the firm’s CLOs and real estate investment trusts. Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 12/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Net Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) MoM(9) Platform: Capital Capital Funds Air Partners 1993 $ 64 $ 64 $ 697 $ — $ 697 81% 10.9x 73% 8.9x TPG I 1994 721 696 3,095 — 3,095 47% 4.4x 36% 3.5x TPG II 1997 2,500 2,554 5,010 — 5,010 13% 2.0x 10% 1.7x TPG III 1999 4,497 3,718 12,360 — 12,360 34% 3.3x 26% 2.6x TPG IV 2003 5,800 6,157 13,733 — 13,733 20% 2.2x 15% 1.9x TPG V 2006 15,372 15,564 22,071 1 22,072 6% 1.4x 5% 1.4x TPG VI 2008 18,873 19,220 33,344 196 33,540 14% 1.7x 10% 1.5x TPG VII 2015 10,495 10,205 19,422 4,506 23,928 26% 2.3x 20% 1.9x TPG VIII 2019 11,505 10,737 3,264 15,438 18,702 37% 1.7x 25% 1.5x TPG IX 2022 12,014 4,662 — 5,225 5,225 225% 1.2x 39% 1.0x Capital Funds 81,841 73,577 112,996 25,366 138,362 23% 1.9x 15% 1.6x Asia Funds Asia I 1994 96 78 71 — 71 (3%) 0.9x (10%) 0.7x Asia II 1998 392 764 1,669 — 1,669 17% 2.2x 14% 1.9x Asia III 2000 724 623 3,316 — 3,316 46% 5.3x 31% 3.8x Asia IV 2005 1,561 1,603 4,089 — 4,089 23% 2.6x 17% 2.1x Asia V 2007 3,841 3,257 5,405 166 5,571 10% 1.7x 6% 1.4x Asia VI 2012 3,270 3,285 3,380 3,505 6,885 15% 2.1x 11% 1.7x Asia VII 2017 4,630 4,522 2,341 5,652 7,993 21% 1.7x 14% 1.4x Asia VIII 2022 4,319 2,022 — 2,375 2,375 686% 1.2x 129% 1.1x Asia Funds 18,833 16,154 20,271 11,698 31,969 20% 2.0x 14% 1.7x Healthcare Funds THP I 2019 2,704 2,405 840 2,978 3,818 33% 1.6x 19% 1.3x THP II 2022 3,576 1,093 — 1,294 1,294 339% 1.3x 85% 1.1x Healthcare Funds 6,280 3,498 840 4,272 5,112 35% 1.5x 20% 1.3x Continuation Vehicles TPG AAF 2021 1,317 1,314 2,720 — 2,720 43% 2.1x 37% 1.9x TPG AION 2021 207 207 — 182 182 (5%) 0.9x (6%) 0.9x Continuation Vehicles $ 1,524 $ 1,521 $ 2,720 $ 182 $ 2,902 37% 1.9x 31% 1.7x
TPG | 31 Fund Performance Metrics (Cont’d) These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performances metrics exclude the firm’s CLOs and real estate investment trusts. Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 12/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Net Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) MoM(9) Platform: Growth Growth Funds STAR 2007 $ 1,264 $ 1,259 $ 1,865 $ 42 $ 1,907 13% 1.5x 6% 1.3x Growth II 2011 2,041 2,185 4,734 598 5,332 22% 2.5x 16% 2.0x Growth III 2015 3,128 3,370 4,675 2,306 6,981 26% 2.0x 18% 1.7x Growth IV 2017 3,739 3,612 1,946 4,890 6,836 22% 1.8x 15% 1.5x Gator 2019 726 686 661 608 1,269 31% 1.8x 25% 1.6x Growth V 2020 3,558 3,225 403 4,375 4,778 29% 1.5x 18% 1.3x Growth VI 2023 1,112 144 — 144 144 NM NM NM NM Growth Funds 15,568 14,481 14,284 12,963 27,247 20% 1.9x 14% 1.6x Tech Adjacencies Funds TTAD I 2018 1,574 1,497 941 1,709 2,650 25% 1.7x 20% 1.5x TTAD II 2021 3,198 1,763 63 1,896 1,959 9% 1.1x 4% 1.0x Tech Adjacencies Funds 4,772 3,260 1,004 3,605 4,609 22% 1.4x 16% 1.3x TDM 2017 1,326 571 — 1,142 1,142 20% 2.0x 16% 1.7x LSI 2023 367 84 — 84 84 NM NM NM NM Platform: Impact The Rise Funds Rise I 2017 2,106 1,996 1,318 2,511 3,829 21% 1.9x 13% 1.5x Rise II 2020 2,176 1,973 128 2,817 2,945 25% 1.5x 16% 1.3x Rise III 2022 2,700 1,103 5 1,261 1,266 98% 1.2x (2%) 1.0x The Rise Funds 6,982 5,072 1,451 6,589 8,040 22% 1.6x 14% 1.3x TSI 2018 333 133 368 — 368 35% 2.8x 25% 2.1x Evercare 2019 621 432 29 326 355 (5%) 0.8x (10%) 0.7x Rise Climate 2021 7,268 4,579 208 5,839 6,047 54% 1.4x 27% 1.2x TPG NEXT 2023 $ 510 $ 3 $ — $ 3 $ 3 NM NM NM NM
TPG | 32 Fund Performance Metrics (Cont’d) These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performances metrics exclude the firm’s CLOs and real estate investment trusts. Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 12/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Net Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) MoM(9) Platform: Real Estate TPG Real Estate Partners DASA RE 2012 $ 1,078 $ 576 $ 1,069 $ — $ 1,069 21% 1.9x 15% 1.6x TREP II 2014 2,065 2,213 3,520 60 3,580 28% 1.7x 18% 1.5x TREP III 2018 3,722 4,151 2,630 2,606 5,236 14% 1.3x 9% 1.2x TREP IV 2022 6,820 1,708 208 1,481 1,689 (14%) 0.9x (63%) 0.5x TPG Real Estate Partners 13,685 8,648 7,427 4,147 11,574 21% 1.5x 13% 1.3x TAC+ 2021 1,797 916 98 815 913 (1%) 1.0x (4%) 0.9x TRECO 378 — — — — NM NM NM NM Platform: Market Solutions NewQuest Funds NewQuest I(11) 2011 390 291 767 — 767 48% 3.2x 37% 2.3x NewQuest II(11) 2013 310 342 646 115 761 25% 2.3x 19% 1.8x NewQuest III(11) 2016 541 543 412 450 862 13% 1.6x 8% 1.3x NewQuest IV(11) 2020 1,000 879 132 1,108 1,240 23% 1.4x 13% 1.2x NewQuest V(11) 2022 502 272 7 344 351 NM NM NM NM NewQuest Funds 2,743 2,327 1,964 2,017 3,981 35% 1.8x 23% 1.5x TGS(11) 2022 749 272 — 295 295 NM NM NM NM Platform: TPG Angelo Gordon Credit Solutions Credit Solutions Credit Solutions I 2019 1,805 1,801 1,475 1,156 2,631 17% 1.5x 13% 1.4x Credit Solutions I Dislocation A 2020 909 602 795 — 795 34% 1.3x 27% 1.3x Credit Solutions I Dislocation B 2020 308 176 211 — 211 28% 1.2x 21% 1.2x Credit Solutions II 2021 3,134 2,559 245 2,655 2,900 16% 1.1x 11% 1.1x Credit Solutions II Dislocation A 2022 1,310 868 5 1,001 1,006 34% 1.2x 25% 1.1x Credit Solutions 7,466 6,006 2,731 4,812 7,543 19% 1.3x 14% 1.2x Essential Housing Essential Housing I 2020 642 456 470 102 572 15% 1.3x 12% 1.2x Essential Housing II 2021 2,534 1,071 59 1,112 1,171 14% 1.1x 10% 1.1x Essential Housing $ 3,176 $ 1,527 $ 529 $ 1,214 $ 1,743 14% 1.2x 11% 1.1x
TPG | 33 Fund Performance Metrics (Cont’d) These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performances metrics exclude the firm’s CLOs and real estate investment trusts. Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 12/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Net Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) MoM(9) Structured Credit & Specialty Finance ABC Fund 2021 $ 1,005 $ 653 $ 29 $ 709 $ 738 17% 1.1x 13% 1.1x Structured Credit & Specialty Finance 1,005 653 29 709 738 17% 1.1x 13% 1.1x Middle Market Direct Lending(12) MMDL I 2015 594 572 846 — 846 14% 1.6x 10% 1.4x MMDL II 2016 1,580 1,563 1,684 608 2,292 14% 1.6x 11% 1.5x MMDL III 2018 2,751 2,548 1,929 1,648 3,577 14% 1.5x 10% 1.4x MMDL IV 2020 2,671 2,522 457 2,713 3,170 16% 1.3x 12% 1.3x MMDL IV Annex 2021 797 672 69 700 769 15% 1.2x 11% 1.2x MMDL V 2022 1,972 603 6 668 674 18% 1.2x 14% 1.2x Middle Market Direct Lending 10,365 8,480 4,991 6,337 11,328 15% 1.5x 11% 1.4x U.S. Real Estate Realty Realty I 1994 30 30 65 — 65 27% 2.2x 20% 1.9x Realty II 1995 33 33 81 — 81 31% 2.4x 22% 2.2x Realty III 1997 61 94 120 — 120 5% 1.3x 3% 1.3x Realty IV 1999 255 332 492 — 492 11% 1.5x 8% 1.5x Realty V 2001 333 344 582 — 582 32% 1.7x 26% 1.6x Realty VI 2005 514 558 657 — 657 5% 1.2x 3% 1.1x Realty VII 2007 1,257 1,675 2,543 1 2,544 17% 1.7x 12% 1.5x Realty VIII 2011 1,265 2,129 2,758 213 2,971 16% 1.7x 11% 1.5x Realty IX 2015 1,329 1,972 2,171 314 2,485 9% 1.4x 5% 1.3x Realty Value X 2018 2,775 4,312 3,492 2,101 5,593 20% 1.4x 13% 1.3x Realty Value XI 2022 2,558 1,284 389 998 1,387 20% 1.1x (3%) 1.0x Realty 10,410 12,763 13,350 3,627 16,977 15% 1.5x 10% 1.3x Core Plus Realty Core Plus Realty I 2003 534 532 876 — 876 20% 1.6x 18% 1.5x Core Plus Realty II 2006 794 1,112 1,456 — 1,456 11% 1.4x 8% 1.3x Core Plus Realty III 2011 1,014 1,420 2,231 — 2,231 23% 1.8x 19% 1.6x Core Plus Realty IV 2015 1,308 1,994 1,988 359 2,347 6% 1.3x 3% 1.2x Core Plus Realty $ 3,650 $ 5,058 $ 6,551 $ 359 $ 6,910 15% 1.5x 11% 1.4x
TPG | 34 Fund Performance Metrics (Cont’d) These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performances metrics exclude the firm’s CLOs and real estate investment trusts. Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 12/31/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Net Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) MoM(9) Asia Real Estate Asia Realty Asia Realty I 2006 $ 526 $ 506 $ 645 $ — $ 645 6% 1.3x 3% 1.2x Asia Realty II 2010 616 602 1,071 — 1,071 24% 1.8x 17% 1.6x Asia Realty III 2015 847 844 969 244 1,213 14% 1.5x 9% 1.3x Asia Realty IV 2018 1,315 1,245 747 1,117 1,864 20% 1.5x 13% 1.4x Asia Realty V 2022 1,854 326 17 346 363 NM NM NM NM Asia Realty 5,158 3,523 3,449 1,707 5,156 13% 1.5x 9% 1.3x Japan Value Japan Value(13) 2023 398 15 — 17 17 NM NM NM NM Japan Value 398 15 — 17 17 NM NM NM NM Europe Real Estate Europe Realty I 2014 570 1,184 1,709 15 1,724 24% 2.0x 17% 1.7x Europe Realty II 2017 843 1,657 1,489 787 2,276 12% 1.5x 9% 1.4x Europe Realty III(14) 2019 1,515 1,784 582 1,236 1,818 14% 1.3x 9% 1.2x Europe Realty IV(14) 2023 1,163 36 — 36 36 NM NM NM NM Europe Realty 4,091 4,661 3,780 2,074 5,854 17% 1.6x 12% 1.4x Net Lease Net Lease Realty I 2006 159 209 457 — 457 18% 2.4x 14% 2.2x Net Lease Realty II 2010 559 1,060 1,854 — 1,854 16% 2.4x 11% 2.0x Net Lease Realty III 2013 1,026 2,352 2,202 1,002 3,204 12% 1.8x 8% 1.5x Net Lease Realty IV 2019 997 1,736 1,132 795 1,927 10% 1.2x 6% 1.1x Net Lease Realty V 99 — — — — NM NM NM NM Net Lease $ 2,840 $ 5,357 $ 5,645 $ 1,797 $ 7,442 15% 1.8x 10% 1.5x
TPG | 35 Significant Perpetual Funds These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performances metrics exclude the firm’s CLOs and real estate investment trusts. Past performance is not indicative of future results. See notes on the following pages. ($ in millions, as of 12/31/23) Vintage AUM Total Fund Year(1) Return(10) Platform: Market Solutions TPEP Long/Short(15) 2013 $ 2,099 126% TPEP Long Only(15) 2013 1,915 39% Platform: TPG Angelo Gordon Credit Solutions Corporate Credit Opportunities(16) 1988 333 10% Structured Credit & Specialty Finance MVP Fund(17) 2009 5,883 12% Middle Market Direct Lending TCAP(18) 2022 1,478 9% MMDL Evergreen 2022 698 NM Multi-Strategy Super Fund(17) 1993 $ 902 9%
TPG | 36 Fund Performance Metrics Notes “NM” signifies that the relevant data would not be meaningful. Performance metrics are generally deemed “NM” when, among other reasons, there has been limited time since initial investment. Performance metrics generally exclude amounts attributable to the fund’s general partner, its affiliated entities and “friends-of-the-firm” entities that generally pay no or reduced management fees and performance allocations. These metrics also represent an average of returns for all included investors and do not necessarily reflect the actual return of any particular investor. Amounts shown are in U.S. dollars. Unless otherwise noted, when an investment is made in another currency, (i) Capital Invested is calculated using the exchange rate at the time of the investment, (ii) Unrealized Value is calculated using the exchange rate at the period end and (iii) Realized Value reflects actual U.S. dollar proceeds to the fund. 1) Vintage Year represents the year in which the fund consummated its first investment (or, if earlier, received its first capital contributions from investors). For platforms other than TPG Angelo Gordon, for consistency with prior reporting, however, the Vintage Year classification of any fund that held its initial closing before 2018 represents the year of such fund’s initial closing. 2) Capital Committed represents the amount of inception to date commitments a particular fund has received. Certain of our newer vintage funds are actively fundraising and capital committed is subject to change. 3) Capital Invested represents cash outlays by the fund for its investments, whether funded through investor capital contributions or borrowing under the fund’s credit facility. For TPG AG Credit funds, Capital Invested represents inception-to-date investor contributed capital net of returned contributions, excluding borrowings under the fund’s credit facility. 4) Realized Value represents total cash received or earned by the fund in respect of such investment or investments through the period end, including all interest, dividends and other proceeds. For TPG AG Credit funds, Realized Value represents inception-to-date capital distributed by the fund, including any performance distributions net of recalled distributions, if any. 5) Unrealized Value, with respect to an investment in a publicly traded security, is based on the closing market price of the security as of the period end on the principal exchange on which the security trades, as adjusted by the general partner for any restrictions on disposition. Unrealized Value, with respect to an investment that is not a publicly traded security, represents the general partner’s estimate of the unrealized fair value of the fund’s investment. Unrealized Value, with respect to TPG AG Credit funds, represents the ending NAV for such fund, which is the period end ending capital balances of the investors and general partner. Valuations entail a degree of subjectivity, and therefore actual value may differ from such estimated value and these differences may be material and adverse. Except as otherwise noted, valuations are as of the period end. 6) Total Value is the sum of Realized Value and Unrealized Value of investments. 7) Gross IRR and Gross MoM represent investment level performance by the fund and incorporates the impact of fund level credit facilities, to the extent utilized by the fund. Gross IRR and Gross MoM are calculated by adjusting Net IRR and Net MoM to generally approximate investor performance metrics excluding management fees, fund expenses (other than interest expense and other fees arising from amounts borrowed under the fund’s credit facility to fund investments) and performance allocations. Gross IRR is the discount rate at which (i) the present value of all Capital Invested in an investment or investments is equal to (ii) the present value of all realized and unrealized returns from such investment or investments. Gross IRR and Gross MoM for TPG AG Credit funds are calculated at the fund level and do not consider the impact of credit facilities and exclude fund expenses. 8) Net IRR represents the compound annualized return rate (i.e., the implied discount rate) of a fund, which is calculated using investor cash flows in the fund, including cash received from capital called from investors, cash distributed to investors and the investors’ ending capital balances as of the period end. Net IRR is the discount rate at which (i) the present value of all capital contributed by investors to the fund (which excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital) is equal to (ii) the present value of all cash distributed to investors and the investors’ ending capital balances. 9) Net MoM represents the multiple-of-money on contributions to the fund by investors. Net MoM is calculated as the sum of cash distributed to investors and the investors’ ending capital balances as of the period end, divided by the amount of capital contributed to the fund by investors (which amount excludes, for the avoidance of doubt, any amounts borrowed by the fund in lieu of calling capital). 10) Total Return represents net performance data for investors (excluding certain classes/series with special fee arrangements), net of all expenses including actual quarterly management fees payable by the fund and the accrual of carried interest to the general partner. 11) Unless otherwise specified, the fund performance information presented above for certain funds is, due to the nature of their strategy, as of September 30, 2023.
TPG | 37 Fund Performance Metrics Notes (Cont’d) 12) Each Middle Market Direct Lending fund is comprised of four vehicles: onshore levered, onshore unlevered, offshore levered and offshore unlevered. Capital Committed, Capital Invested, Realized Value, Unrealized Value and Total Value for each fund are presented on a consolidated basis across the four vehicles. Performance metrics are presented only for the onshore levered vehicle of each fund. The Net IRRs and Net MoMs for TPG AG Middle Market Direct Lending funds on a consolidated basis were: (i) for the onshore unlevered vehicles, 7% and 1.3x, (ii) for the offshore levered vehicles, 10% and 1.3x and (iii) for the offshore unlevered vehicles, 7% and 1.1x. 13) Japanese-Yen denominated fund. Commitments, Capital Invested and Realized Value are calculated using the exchange rate at the end of the quarter in which the relevant commitment was made or transaction occurred, as applicable. 14) Includes Euro denominated fund entity with Commitments, Capital Invested and Realized Value calculated using the exchange rate at the end of the quarter in which the relevant commitment was made or transaction occurred, as applicable. Performance metrics only reflects capital committed in U.S. dollars, which represents the majority of capital committed to each fund. Net IRR and Net MoM were: (i) for the euro-denominated vehicle of Europe Realty III, 7% and 1.2x and (ii) for the euro-denominated vehicle of Europe Realty IV, NM and NM. 15) These performance estimates represent the composite performance of TPG Public Equity Partners, LP and TPG Public Equity Partners Master Fund, L.P., adjusted as described below. The performance estimates are based on an investment in TPG Public Equity Partners, LP made on September 1, 2013, the date of TPEP’s inception, with the performance estimates for the period from January 1, 2016 to present being based on an investment in TPG Public Equity Partners Master Fund, L.P. made through TPG Public Equity Partners-A, L.P., the “onshore feeder.” As of December 31, 2023, TPEP Long/Short had estimated inception-to-date gross returns of 172% and net returns of 126%. Gross performance figures (i) are presented after any investment-related expenses, net interest, other expenses and the reinvestment of dividends; (ii) include any gains or losses from “new issue” securities; and (iii) are adjusted for illustration purposes to reflect the reduction of a hypothetical 1.5% annual management fee. These performance estimates represent performance for TPEP Long Only and are based on an investment in TPEP Long Only made on May 1, 2019, the date of TPEP Long Only’s inception, through TPG Public Equity Partners Long Opportunities-A, L.P., the “onshore feeder.” As of December 31, 2023, TPEP Long Only had estimated inception-to-date gross returns of 39% and net returns of 39%. Gross performance figures are presented after any investment-related expenses, a 1% annual management fee, net interest, other expenses and the reinvestment of dividends, and include any gains or losses from “new issue” securities. 16) Total Return includes onshore investors participating directly through the master fund and investors through the offshore vehicle. Total Return for the offshore vehicle was 4%. 17) Total Returns for onshore funds only. Total Returns for the offshore vehicles were: (i) for the MVP Fund, 11% and (ii) for the Super Fund, 8%. 18) TCAP launched on January 1, 2023. Total Return includes AGTB Private BDC, which commenced operations on May 10, 2022 and merged with TCAP on January 1, 2023. Total Return is calculated as the change in NAV per share during the period, plus distributions per share (assuming dividends and distributions are reinvested) divided by the beginning NAV per share. Inception-to-date figures for Class I, Class D, and Class S shares use the initial offering price per share as the beginning NAV. Total Return presented is for Class I and is prior to the impact of any potential upfront placement fees. An investment in TCAP is subject to a maximum upfront placement fee of 1.5% for Class D and 3.5% for Class S, which would reduce the amount of capital available for investment, if applicable. There are no upfront placement fees for Class I shares. Total Return has been annualized for periods less than or greater than one year. On July 28, 2023, TCAP completed its merger with AGTB where TCAP paid cash consideration for each share of common stock of AGTB. TCAP will continue as the surviving company. At the completion of the merger, AGTB’s final Net IRR was 6.1%.
TPG | 38 GAAP Statements of Operations Expanded (Unaudited) ($ in thousands) 4Q’22 1Q’23 2Q’23 3Q’23 4Q’23 FY’23 Revenues Fees and other $ 350,179 $ 311,471 $ 327,103 $ 366,149 $ 529,903 $ 1,534,626 Capital allocation-based (loss) income 89,156 331,674 276,171 (205,794) 453,234 855,285 Total revenues 439,335 643,145 603,274 160,355 983,137 2,389,911 Expenses Compensation and benefits: Cash-based compensation and benefits 124,945 120,451 115,667 123,160 188,099 547,377 Equity-based compensation 153,514 157,293 155,166 136,650 205,813 654,922 Performance allocation compensation 41,949 221,341 172,077 (120,770) 319,028 591,676 Total compensation and benefits 320,408 499,085 442,910 139,040 712,940 1,793,975 General, administrative and other 93,447 104,873 104,544 101,596 171,561 482,574 Depreciation and amortization 8,361 8,222 8,304 7,701 23,446 47,673 Interest expense 6,506 7,418 8,518 7,792 14,800 38,528 Expenses of consolidated Public SPACs 769 519 453 81 — 1,053 Total expenses 429,491 620,117 564,729 256,210 922,747 2,363,803 Investment income (loss) Income (loss) from investments: Net gains (losses) from investment activities (19,286) 14,816 846 (4,203) (4,895) 6,564 Interest, dividends and other 5,775 7,971 9,983 10,994 13,674 42,622 Investment income of consolidated Public SPACs: Unrealized gains on derivative liabilities of Public SPACs 667 (750) 667 750 — 667 Interest, dividends and other 2,201 2,712 3,134 1,846 — 7,692 Total investment income (loss) (10,643) 24,749 14,630 9,387 8,779 57,545 Income (loss) before income taxes (799) 47,777 53,175 (86,468) 69,169 83,653 Income tax expense 8,949 12,103 13,164 8,244 26,757 60,268 Net (loss) income (9,748) 35,674 40,011 (94,712) 42,412 23,385 Net income (loss) attributable to redeemable equity in Public SPACs 1,962 1,529 5,367 5,148 — 12,044 Net loss (income) attributable to non-controlling interests in TPG Operating Group (40,145) (25,492) (25,306) (49,556) 7,943 (92,411) Net income (loss) attributable to other non-controlling interests 4,794 34,582 32,755 (64,971) 21,296 23,662 Net income attributable to TPG Inc. subsequent to Reorganization and IPO $ 23,641 $ 25,055 $ 27,195 $ 14,667 $ 13,173 $ 80,090 Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023.
TPG | 39 Non-GAAP Financial Measures Expanded Includes amounts from TPG AG from November 1, 2023, the date of the Acquisition, through December 31, 2023. See the Reconciliations and Disclosures Section of this presentation for reconciliations of Non-GAAP to the most comparable GAAP measures and adjustment descriptions. ($ in thousands) 4Q’22 1Q’23 2Q’23 3Q’23 4Q’23 FY’23 Fee-Related Revenues Management fees $ 249,933 $ 247,998 $ 256,612 $ 278,503 $ 395,608 $ 1,178,721 Fee-related performance revenues — — — — 1,642 1,642 Transaction, monitoring and other fees, net 46,245 4,672 16,864 30,892 55,285 107,713 Other income 11,131 12,783 12,256 11,947 12,192 49,178 Fee-Related Revenues 307,308 265,453 285,733 321,342 464,727 1,337,254 Fee-Related Expenses Cash-based compensation and benefits, net 102,476 100,155 95,888 99,605 156,622 452,270 Fee-related performance compensation — — — — 1,401 1,401 Operating expenses, net 65,981 66,014 64,415 65,670 81,153 277,252 Fee-Related Expenses 168,457 166,169 160,303 165,275 239,176 730,923 Fee-Related Earnings 138,853 99,284 125,430 156,067 225,551 606,331 Realized performance allocations, net 95,039 5,025 6,630 43,376 18,996 74,027 Realized investment income and other, net 19,638 (5,175) (22,762) 5,672 (24,976) (47,241) Depreciation expense (1,270) (1,131) (1,213) (1,235) (3,010) (6,589) Interest expense, net (1,033) (1,033) 816 2,706 (1,088) 1,401 Distributable Earnings 251,227 96,970 108,901 206,586 215,473 627,929 Income taxes (24,681) (9,128) (12,662) (11,007) (9,826) (42,623) After-Tax Distributable Earnings $ 226,546 $ 87,842 $ 96,240 $ 195,579 $ 205,647 $ 585,306
Reconciliations and Disclosures
TPG | 41 GAAP to Non-GAAP Financial Measures Reconciliation ($ in thousands) 4Q’22 1Q’23 2Q’23 3Q’23 4Q’23 FY’23 GAAP Revenue $ 439,335 $ 643,145 $ 603,274 $ 160,355 $ 983,137 $ 2,389,911 Capital-allocation based income (89,156) (331,674) (276,171) 205,794 (453,234) (855,285) Expense reimbursements (43,172) (44,249) (40,105) (44,050) (57,150) (185,554) Investment (income) loss and other 301 (1,769) (1,265) (757) (8,026) (11,818) Fee-Related Revenues $ 307,308 $ 265,453 $ 285,733 $ 321,342 $ 464,727 $ 1,337,254 GAAP Expenses $ 429,491 $ 620,117 $ 564,729 $ 256,210 $ 922,747 $ 2,363,803 Depreciation and amortization expense (8,361) (8,222) (8,304) (7,701) (23,446) (47,673) Interest expense (6,506) (7,418) (8,518) (7,792) (14,800) (38,528) Expenses related to consolidated TPG Funds and Public SPACs (769) (519) (453) (81) — (1,053) Expense reimbursements (43,172) (44,249) (40,105) (44,050) (57,150) (185,554) Performance allocation compensation (41,949) (221,341) (172,077) 120,770 (319,028) (591,676) Equity-based compensation (153,514) (157,293) (155,166) (136,650) (205,813) (654,922) Acquisition success fees — — — — (20,000) (20,000) Non-core expenses and other (6,763) (14,906) (19,803) (15,431) (43,334) (93,474) Fee-Related Expenses $ 168,457 $ 166,169 $ 160,303 $ 165,275 $ 239,176 $ 730,923 ($ in thousands) 4Q’22 1Q’23 2Q’23 3Q’23 4Q’23 FY’23 Net (loss) income $ (9,748) $ 35,674 $ 40,011 $ (94,712) $ 42,412 $ 23,385 Net (income) loss attributable to redeemable interests in Public SPACs (1,962) (1,529) (5,367) (5,148) — (12,044) Net loss (income) attributable to other non-controlling interests (4,794) (34,582) (32,755) 64,971 (21,296) (23,662) Amortization expense 4,849 3,538 3,538 2,913 16,979 26,968 Equity-based compensation 154,115 155,706 154,564 137,896 204,648 652,814 Unrealized performance allocations, net 82,719 (66,475) (50,927) 68,244 (63,092) (112,250) Unrealized investment loss (income) 22,301 (9,350) (12,655) 27,120 (16,951) (11,836) Unrealized (gain) on derivatives (59) 66 (59) (66) — (59) Income tax (15,762) 2,988 797 (3,068) 17,311 18,028 Acquisition success fees — — — — 20,000 20,000 Non-recurring and other (5,113) 1,805 (907) (2,571) 5,636 3,962 After-tax Distributable Earnings 226,546 87,842 96,240 195,579 205,647 585,306 Income taxes 24,681 9,128 12,662 11,007 9,826 42,623 Distributable Earnings 251,227 96,970 108,901 206,586 215,473 627,929 Realized performance allocations, net (95,039) (5,025) (6,630) (43,376) (18,996) (74,027) Realized investment income and other, net (19,638) 5,175 22,762 (5,672) 24,976 47,241 Depreciation expense 1,270 1,131 1,213 1,235 3,010 6,589 Interest expense, net 1,033 1,033 (816) (2,706) 1,088 (1,401) Fee-Related Earnings $ 138,853 $ 99,284 $ 125,430 $ 156,067 $ 225,551 $ 606,331
TPG | 42 GAAP to Non-GAAP Balance Sheet Reconciliation ($ in thousands) 4Q’22 4Q’23 Total GAAP Assets $ 7,941,738 $ 9,369,672 Impact of consolidated Public SPACs Cash and cash equivalents (5,097) — Assets held in Trust Account (653,635) — Due from affiliates (45) — Other assets (412) — Subtotal for consolidated Public SPACs (659,189) — Impact of other consolidated entities Cash and cash equivalents (415,797) (559,708) Due from affiliates (211,097) (346,910) Investments (4,110,535) (4,954,855) Intangible assets and goodwill (91,900) (77,688) Other assets (42,605) (285,406) Subtotal for other consolidated entities (4,871,934) (6,224,567) Reclassification adjustments Restricted cash (13,166) (13,183) Due from affiliates 8,458 (72,067) Investments (1,219,333) (1,769,257) Net accrued performance 642,519 891,455 Investments in funds 576,814 877,802 Other assets 94,520 502,419 Subtotal for reclassification adjustments 89,812 417,169 Total Book Assets $ 2,500,427 $ 3,562,274 ($ in thousands) 4Q’22 4Q’23 Total GAAP Liabilities $ 4,202,232 $ 6,008,538 Impact of consolidated Public SPACs Accounts payable and accrued expenses (236) — Derivative liabilities of Public SPACs (667) — Deferred underwriting (22,750) — Subtotal for consolidated Public SPACs (23,653) — Impact of other consolidated entities Accounts payable and accrued expenses (90,685) (167,235) Due to affiliates (134,562) (137,479) Accrued performance allocation compensation (3,269,889) (4,096,052) Other liabilities (206,276) (377,727) Subtotal for other consolidated entities (3,701,412) (4,778,493) Reclassification adjustments Accounts payable and accrued expenses 40,698 291,586 Due to affiliates (5,301) (5,696) Other liabilities (19,815) (274,736) Subtotal for reclassification adjustments 15,582 11,154 Total Book Liabilities $ 492,749 $ 1,241,199
TPG | 43 4Q’23 Pro Forma GAAP Statement of Operations Three Months Ended December 31, 2023 Historical ($ in thousands) TPG Inc. Angelo Gordon Transaction Accounting Adjustments Notes Transaction Accounting Compensation Adjustments Notes Pro Forma Combined Revenues Fees and other $ 529,903 $ 50,216 $ (1,000) (1), (4) $ — $ 579,119 Capital allocation-based income (loss) 453,234 (17,497) — — 435,737 Total revenues 983,137 32,719 (1,000) — 1,014,856 Expenses Compensation and benefits: Cash-based compensation and benefits 188,099 14,134 — 14,068 (9) 216,301 Equity-based compensation 205,813 6,953 — 17,948 (7) 230,714 Performance allocation compensation 319,028 14,601 — (53,012) (8), (9) 280,617 Total compensation and benefits 712,940 35,688 — (20,996) 727,632 General, administrative and other 171,561 79,550 (44) (1), (5) (4,887) (8) 246,180 Depreciation and amortization 23,446 840 6,972 (2) — 31,258 Interest expense 14,800 495 2,379 (3) — 17,674 Total expenses 922,747 116,573 9,307 (25,883) 1,022,744 Investment income Income from investments: Net gains from investment activities (4,895) (228) — — (5,123) Interest, dividends and other 13,674 2,088 — — 15,762 Total investment income (loss) 8,779 1,860 — — 10,639 Income (loss) before income taxes 69,169 (81,994) (10,307) 25,883 2,751 Income tax expense 26,757 649 (5,564) (6) (401) (6) 21,441 Net (loss) income $ 42,412 $ (82,643) $ (4,743) $ 26,284 $ (18,690) Pro forma figures have not been prepared in accordance with Article 11 of Regulation S-X, and are on an adjusted basis, assuming the Acquisition occurred on January 1, 2023. Due to the Acquisition, comparability of prior periods may be limited. See notes on the following pages for a description of each adjustment.
TPG | 44 FY’23 Pro Forma GAAP Statement of Operations Pro forma figures have been prepared in accordance with Article 11 of Regulation S-X, and are on an adjusted basis, assuming the Acquisition occurred on January 1, 2023. Due to the Acquisition, comparability of prior periods may be limited. See notes on the following pages for a description of each adjustment. Year Ended December 31, 2023 Historical ($ in thousands) TPG Inc. Angelo Gordon Transaction Accounting Adjustments Notes Transaction Accounting Compensation Adjustments Notes Pro Forma Combined Revenues Fees and other $ 1,534,626 $ 483,413 $ (464) (1), (4) $ — $ 2,017,575 Capital allocation-based income (loss) 855,285 173,329 (1,046) (1) — 1,027,568 Total revenues 2,389,911 656,742 (1,510) — 3,045,143 Expenses Compensation and benefits: Cash-based compensation and benefits 547,377 338,226 — (92,720) (9) 792,883 Equity-based compensation 654,922 13,438 — 267,507 (7) 935,867 Performance allocation compensation 591,676 83,337 — 52,880 (8) 727,893 Total compensation and benefits 1,793,975 435,001 — 227,667 2,456,643 General, administrative and other 482,574 245,116 839 (1), (5) (4,887) (8) 723,642 Depreciation and amortization 47,673 8,315 70,300 (2) — 126,288 Interest expense 38,528 5,776 23,505 (3) — 67,809 Expenses of consolidated Public SPACs and Investment Funds: Interest expense — 50,450 (50,450) (1) — — General, administrative and other — 956 (956) (1) — — Other 1,053 — — — 1,053 Total expenses 2,363,803 745,614 43,238 222,780 3,375,435 Investment income Income (loss) from investments: Net gains (losses) from investment activities 6,564 (3,736) — — 2,828 Interest, dividends and other 42,622 17,584 — — 60,206 Investment income of consolidated Public SPACs and Investment Funds: Unrealized gains (losses) on derivative liabilities of Public SPACs 667 — — — 667 Net gains (losses) from consolidated fund investment activities — (12,148) 12,148 (1) — — Interest, dividends and other 7,692 64,855 (64,855) (1) — 7,692 Total investment income (loss) 57,545 66,555 (52,707) — 71,393 Income (loss) before income taxes 83,653 (22,317) (97,455) (222,780) (258,899) Income tax expense 60,268 4,412 (8,266) (6) (10,174) (6) 46,240 Net (loss) income $ 23,385 $ (26,729) $ (89,189) $ (212,606) $ (305,139)
TPG | 45 3) Reflects an adjustment to interest expense of $2.4 million and $25.2 million for the three months ended December 31, 2023 and year ended December 31, 2023, respectively, related to the $470.0 million draw on TPG’s Senior Unsecured Revolving Credit Facility using an estimated effective interest rate of 6.54% per annum based on the terms of the facility. The effective interest rate is based on the one-month SOFR plus 110 basis points. The portion of historical unused commitment fee was reversed, partially offsetting the increase in interest expense. This adjustment also reflects the removal of interest expense of $1.7 million for the year ended December 31, 2023 as a result of the repayment and termination of an Angelo Gordon credit facility prior to closing. The Angelo Gordon Credit Facility was repaid and terminated on September 25, 2023. Transaction Accounting Adjustments 1) Reflects statement of operations activities that will not continue for the combined company, including: a) Removal of amounts related to Angelo Gordon’s CLOs that were deconsolidated in Angelo Gordon's unaudited consolidated financial statements as of June 30, 2023 in accordance with the terms of the Transaction Agreement. Such activities include: 1. Removal of interest expense of $50.5 million, general, administrative and other of $1.0 million and total net investment income of $52.7 million for the year ended December 31, 2023. 2. Recognition of $3.0 million in management fee income (before the management fee reduction adjustment in Note (4)) and $1.0 million of capital allocation-based loss for the year ended December 31, 2023. b) Removal of charges recorded within Angelo Gordon's general, administrative and other expenses, related to an insurance policy for a founder partner of Angelo Gordon that did not continue after the closing. The amount is $0.1 million for the three months ended December 31, 2023 and $1.3 million for the year ended December 31, 2023. 2) The following table presents the amortization expense of the acquired finite lived intangible assets following the consummation of the Acquisition: Notes to Pro Forma GAAP Statement of Operations ($ in thousands) Three Months Ended December 31, 2023 Year Ended December 31, 2023 Trade name - Angelo Gordon $ 703 $ 2,818 Technology 2,867 11,500 Acquired carried interest 7,633 30,615 Investment management agreements 8,666 34,761 Non-compete agreements 1,164 4,667 Less: Related intangible amortization recorded within historical TPG financials: (14,061) (14,061) Total expected amortization pro forma adjustment $ 6,972 $ 70,300
TPG | 46 Transaction Accounting Adjustments (Cont’d) 4) Represents the reduction of management fee income related to a certain fund where TPG did not acquire 100% of the on-going management fee stream. This arrangement results in a reduction of management fees of $1.0 million and $3.5 million for the three months ended December 31, 2023 and year ended December 31, 2023, respectively. 5) Represents the net increase of Angelo Gordon lease expense of $0.1 million and $2.1 million for the three months ended December 31, 2023, and the year ended December 31, 2023, respectively as a result of remeasuring Angelo Gordon’s right-of-use asset and lease liability balances in conjunction with the Acquisition. 6) TPG Operating Group has been and is expected to continue to be treated as partnerships for U.S. federal and state income tax purposes. Following the Acquisition, the income from the Acquired Interests allocable to TPG Inc. from its ownership interest in the TPG Operating Group, is subject to U.S. federal income taxes and local income taxes. As a result, the unaudited pro forma condensed combined financial information reflects adjustments to income tax expense to incorporate the income tax effects in connection with the additional allocable income from the Acquired Interests and the transaction accounting adjustments attributable to TPG Inc. at a blended statutory income tax rate of 23.0%. The blended statutory income tax rate was calculated on a pro forma basis, assuming the U.S. federal rate currently in effect of 21% and the statutory income tax rates applicable to each state and local jurisdiction where we estimate our income will be taxable. The applicable blended statutory tax rate used for the unaudited pro forma condensed combined financial information will likely vary from the actual effective tax rates in future periods subsequent to the Acquisition. The following table summarizes pro forma income tax expense associated with Transaction Accounting Adjustments: Notes to Pro Forma GAAP Statement of Operations (Cont’d) ($ in thousands) Three Months Ended December 31, 2023 Year Ended December 31, 2023 Additional allocable income from the Acquired Interests $ (81,959) $ (25,397) Transaction Accounting Adjustments attributable to TPG Inc. 57,768 (10,542) Additional net income attributable to TPG Inc. (24,191) (35,939) TPG Inc. effective tax rate 23.0% 23.0% Income tax effects of additional net income attributable to TPG Inc. from the Acquired Interests and Transaction Accounting Adjustments (5,564) (8,266) Total income tax expense pro forma adjustment associated with Transaction Accounting Adjustments $ (5,564) $ (8,266) The following table summarizes pro forma income tax expense associated with Transaction Accounting Compensation Adjustments: ($ in thousands) Three Months Ended December 31, 2023 Year Ended December 31, 2023 Transaction Accounting Compensation Adjustments attributable to TPG Inc. $ (1,744) $ (44,234) TPG Inc. effective tax rate 23.0% 23.0% Total income tax expense pro forma adjustment associated with Transaction Accounting Compensation Adjustments $ (401) $ (10,174)
TPG | 47 Notes to Pro Forma GAAP Statement of Operations (Cont’d) Transaction Accounting Compensation Adjustments TPG issued unvested Common Units and RSUs to Angelo Gordon partners that are considered compensatory under U.S. GAAP and are not included in the Purchase Price. Such offering of equity instruments is considered a separate transaction entered into between TPG and Angelo Gordon and is therefore presented separately from the Acquisition. 7) At Closing, TPG issued to certain partners approximately 43.8 million unvested Common Units. TPG also granted approximately 7.0 million RSUs to certain partners and professionals out of a pool of 8.4 million RSUs. The unvested Common Units and RSUs were determined to be compensatory for the combined company. The unvested Common Units and RSUs will generally vest over five years, subject to the recipient’s continued provision of services to TPG through the vesting date. A total grant date fair value of $1,110.4 million for the unvested Common Units will be recognized as post-combination compensation expense during the periods in which the Angelo Gordon partners provide services. The grant date fair value of the unvested Common Units is based on the same inputs as the vested Common Units. The issuance of such unvested Common Units results in the recognition of an additional $18.7 million and $186.9 million of compensation expense for the three months and the year ended December 31, 2023, respectively. A total grant date fair value of $201.8 million for the RSUs will be recognized as post-combination compensation expense during the periods in which the Angelo Gordon partners and employees provide services. The grant date fair value of the RSUs is based on the closing price for the shares of Class A common stock on the grant date. The RSU grants will result in the recognition $31.9 million of compensation expense for the year ended December 31, 2023. No impact for the three months ended December 31, 2023. Additionally, post-combination expense is recognized for the portion of the Earnout Payment that requires provision of on-going services from Angelo Gordon partners. As the Earnout Payment contains both a performance condition and a requisite service period, TPG recognizes compensation expense using the accelerated attribution method. The compensatory portion of the Earnout Payment results in the recognition of an additional $6.2 million and $62.1 million of compensation expense for the three months and the year ended December 31, 2023, respectively. Angelo Gordon historical equity-based compensation of $7.0 million and $13.4 million for the three months and the year ended December 31, 2023, respectively, is reversed. 8) Reflects the additional performance allocation income that is attributed to certain partners of Angelo Gordon as a result of an additional 30% increase in their share of performance allocations. Approximately $27.9 million for the three months ended December 31, 2023 is reflected as additional performance allocation compensation allocated to those Angelo Gordon partners and professionals. Approximately $52.9 million for year ended December 31, 2023 is reflected as a reduction to performance allocation compensation allocated to those Angelo Gordon partners and professionals. Within this amount, approximately $4.9 million represents cash amounts paid to certain legacy interest holders of Angelo Gordon, which were reflected within General, administrative and other expenses during the three months and year ended December 31, 2023. 9) Reflects the reduction of cash-based bonuses that were historically paid to certain Angelo Gordon partners and professionals and reflected within compensation and benefits, net. After the Acquisition, the share of performance allocations to certain Angelo Gordon partners and professionals increased to approximately 80%. Additionally, share-based compensation was granted to such partners in the form of unvested Common Units (as discussed in Note 7). The reduction of cash-based bonuses amounts of $11.1 million and $92.7 million for the three months and year ended December 31, 2023, respectively. Also reflects a $25.1 million true up during the three months ended December 31, 2023 for reclassification of certain cash bonus amounts paid and recorded as compensation and benefits, net from performance allocation compensation to reflect the intended combined company compensation structure.
TPG | 48 4Q’23 Pro Forma Non-GAAP Financial Measures Three Months Ended December 31, 2023 Historical Pro Forma Adjustments ($ in thousands) TPG Inc. Angelo Gordon Transaction Accounting Adjustments Notes Transaction Compensation Adjustments Notes Pro Forma Non-GAAP Combined Management fees $ 395,608 $ 39,397 $ (999) (6) $ — $ 434,006 Fee-related performance revenues 1,642 636 1,173 (5) — 3,451 Transaction, monitoring, and other fees, net 55,285 531 — — 55,816 Other income 12,192 3 — — 12,195 Fee Related Revenues 464,727 40,566 174 — 505,468 Cash-based compensation and benefits, net 156,622 35,067 — (11,058) (9) 180,631 Fee-related performance compensation 1,401 91 — — 1,492 Operating expenses, net 81,153 10,677 (45) (1), (2) (4,887) (8) 86,898 Fee Related Expenses 239,176 45,836 (45) (15,945) 269,021 Total Fee-Related Earnings 225,551 (5,270) 219 15,945 236,447 Realized performance allocations, net 18,996 47,617 — (16,704) (8) 49,909 Realized investment income and other, net (24,976) (18,061) — — (43,037) Depreciation expense (3,010) (892) — — (3,902) Interest expense, net (1,088) 1,709 (2,380) (4) — (1,759) Distributable Earnings 215,473 25,103 (2,161) (759) 237,658 Income taxes (9,826) (459) (1,174) (7) 39 (7) (11,420) After-Tax Distributable Earnings $ 205,647 $ 24,644 $ (3,335) $ (720) $ 226,238 Pro forma figures have not been prepared in accordance with Article 11 of Regulation S-X, and are on an adjusted basis, assuming the Acquisition occurred on January 1, 2023. Due to the Acquisition, comparability of prior periods may be limited. See notes on the following pages for a description of each adjustment and reconciliations of Non-GAAP to the most comparable GAAP measures.
TPG | 49 FY’23 Pro Forma Non-GAAP Financial Measures Year Ended December 31, 2023 Historical Pro Forma Adjustments ($ in thousands) TPG Inc. Angelo Gordon Transaction Accounting Adjustments Notes Transaction Compensation Adjustments Notes Pro Forma Non-GAAP Combined Management fees $ 1,178,721 $ 401,193 $ (3,451) (6) $ — $ 1,576,463 Fee-related performance revenues 1,642 7,828 1,173 (5) — 10,643 Transaction, monitoring, and other fees, net 107,713 2,798 — — 110,511 Other income 49,178 (295) — — 48,883 Fee Related Revenues 1,337,254 411,524 (2,278) — 1,746,500 Cash-based compensation and benefits, net 452,270 327,246 — (92,720) (9) 686,796 Fee-related performance compensation 1,401 3,914 — — 5,315 Operating expenses, net 277,252 77,159 839 (1), (2) (4,887) (8) 350,363 Fee Related Expenses 730,923 408,319 839 (97,607) 1,042,474 Total Fee-Related Earnings 606,331 3,206 (3,117) 97,607 704,026 Realized performance allocations, net 74,027 85,038 — (39,713) (8) 119,352 Realized investment income and other, net (47,241) (48,037) — — (95,278) Depreciation expense (6,589) (8,882) — — (15,471) Interest expense, net 1,401 10,810 (23,505) (3), (4) — (11,294) Distributable Earnings 627,929 42,135 (26,622) 57,894 701,335 Income taxes (42,623) (4,246) (794) (7) (2,963) (7) (50,626) After-Tax Distributable Earnings $ 585,306 $ 37,889 $ (27,416) $ 54,931 $ 650,709 Pro forma figures have been prepared in accordance with Article 11 of Regulation S-X, and are on an adjusted basis, assuming the Acquisition occurred on January 1, 2023. Due to the Acquisition, comparability of prior periods may be limited. See notes on the following pages for a description of each adjustment and reconciliations of Non-GAAP to the most comparable GAAP measures.
TPG | 50 Notes to Pro Forma Combined Non-GAAP Financial Measures Transaction Accounting Adjustments 1) Relates to the removal of charges related to an insurance program of $0.1 million and $1.3 million for the three months and year ended December 31, 2023, respectively, that did not continue after the consummation of the Acquisition. 2) Relates to additional lease expense of $0.1 million and $2.1 million for the three months and year ended December 31, 2023, respectively, as a result of the Acquisition. 3) Relates to the removal of interest expense of $1.7 million for the year ended December 31, 2023 for an Angelo Gordon credit facility, which was repaid and terminated on September 25, 2023. 4) The Senior Unsecured Revolving Credit Facility carries an interest rate of 1 Month Term SOFR plus 110 basis points. The impact of the adjustment is an increase to interest expense of $2.4 million and $25.3 million for the three months and year ended December 31, 2023, respectively. 5) Relates to an increase to Fee-related performance revenues of $1.2 million for the year ended December 31, 2023 that would have been allocable to TPG as of January 1, 2023 for pro forma purposes. 6) Represents the reduction of management fee income related to a certain fund where TPG did not acquire 100% of the on-going management fee interests. This arrangement results in a reduction of management fees of $1.0 million and $3.5 million for the three months and year ended December 31, 2023, respectively. 7) The TPG Operating Group has been and is expected to continue to be treated as partnerships for U.S. federal and state income tax purposes. Following the Acquisition, the income from the Acquired Interests allocable to TPG Inc. from its partnership interest in the TPG Operating Group will be subject to U.S. federal income taxes in addition to state and local income taxes. As a result, the pro forma non-GAAP financial measure incorporates the income tax effect in connection with the additional allocable income from the Acquired Interests and the transaction accounting adjustments attributable to TPG Inc. at a blended statutory income tax rate of 23%. The blended statutory income tax rate was calculated on a pro forma basis, assuming the U.S. federal rate currently in effect of 21% and the statutory income tax rates applicable to each state and local jurisdiction where we estimate our income will be taxable. . Transaction Compensation Adjustments TPG issued unvested Common Units and RSUs to Angelo Gordon partners that are considered compensatory and not included in the Purchase Price. Such offering of equity instruments was considered a separate transaction entered into by TPG and Angelo Gordon and is therefore presented separately from the Acquisition. 8) Following the consummation of the Acquisition, TPG Operating Group received 20% of the performance allocations associated with the general partner entities of Angelo Gordon that TPG Operating Group retained an economic interest in. TPG increased the share of performance allocations of certain partners and professionals from 45%-60% to approximately 80%. The impact of this is a decrease in realized performance fees, net of $16.7 million and $39.7 million for the three months and year ended December 31, 2023, respectively. Within this amount, approximately $4.9 million represents cash amounts paid to certain legacy interest holders of Angelo Gordon, which were included within operating expenses, net during the three months and year ended December 31, 2023. 9) This adjustment reflects the reduction of cash-based bonuses that were historically paid to Angelo Gordon partners within compensation and benefits, net, resulting in a decrease of $11.1 million and $92.7 million for the three months and year ended December 31, 2023, respectively. After the Acquisition, the share of performance allocations for certain Angelo Gordon partners were increased to approximately 80%.
TPG | 51 Pro Forma GAAP to Non-GAAP Reconciliation ($ in thousands) 4Q’23 FY’23 Pro Forma Net (loss) income $ (18,690) $ (305,139) Net (income) loss attributable to redeemable interests in Public SPACs — (12,044) Net loss (income) attributable to other non-controlling interests (64,028) (8,630) Amortization expense 23,951 97,268 Equity-based compensation 229,484 933,420 Unrealized performance allocations, net (9,629) (114,014) Unrealized investment income (14,735) (7,676) Unrealized gains on derivatives — (59) Income tax 10,155 (3,669) Acquisition success fees 63,824 63,824 Non-recurring and other 5,906 7,428 Pro Forma After-tax Distributable Earnings 226,238 650,709 Income taxes 11,420 50,626 Pro Forma Distributable Earnings 237,658 701,335 Realized performance allocations, net (49,909) (119,352) Realized investment income and other, net 43,037 95,278 Depreciation expense 3,902 15,471 Interest expense, net 1,759 11,294 Pro Forma Fee-Related Earnings $ 236,447 $ 704,026
TPG | 52 Additional Information Dividend Policy Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of distributable earnings attributable to the TPG Operating Group, subject to adjustment as determined by our board of directors and, until the Sunset, our Executive Committee to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations. Although we expect to pay at least 85% of our DE as a dividend, the percentage of our DE paid out as a dividend could fall below that target minimum. All of the foregoing is subject to the further qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors and, until the Sunset, our Executive Committee and the board of directors and Executive Committee may change our dividend policy at any time, including, without limitation, to reduce such dividends or even to eliminate such dividends entirely. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and, until the Sunset, our Executive Committee after taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on our ability to pay dividends. Certain of our existing credit facilities include, and any financing arrangement that we enter into in the future may include restrictive covenants that limit our ability to pay dividends. In addition, the TPG Operating Group is generally prohibited under Delaware law from making a distribution to a limited partner to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the TPG Operating Group (with certain exceptions) exceed the fair value of its assets. Subsidiaries of the TPG Operating Group are generally subject to similar legal limitations on their ability to make distributions to the TPG Operating Group. Non-GAAP Financial Measures In this presentation, we disclose non-GAAP financial measures, including Distributable Earnings (“DE”), After-tax DE, Fee-Related Earnings (“FRE”), Fee-Related Revenues (“FRR”), and Fee- Related Expenses. These measures are not financial measures under GAAP and should not be considered as substitutes for net income, revenues or total expenses, and they may not be comparable to similarly titled measures reported by other companies. These measures should be considered in addition to GAAP measures. We use these measures to assess the core operating performance of our business, and further definitions can be found on the following pages.
TPG | 53 Definitions After-tax Distributable Earnings (“After-tax DE”) is a non-GAAP performance measure of our distributable earnings after reflecting the impact of income taxes. We use it to assess how income tax expense affects amounts available to be distributed to our Class A common stock holders and Common Unit holders. After-tax DE differs from U.S. GAAP net income computed in accordance with U.S. GAAP in that it does not include the items described in the definition of DE herein; however, unlike DE, it does reflect the impact of income taxes. Income taxes, for purposes of determining After-tax DE, represent the total U.S. GAAP income tax expense adjusted to include only the current tax expense (benefit) calculated on U.S. GAAP net income before income tax and includes the current payable under our Tax Receivable Agreement. Further, the current tax expense (benefit) utilized when determining After-tax DE reflects the benefit of deductions available to the Company on certain expense items that are excluded from the underlying calculation of DE, such as equity-based compensation charges. We believe that including the amount currently payable under the Tax Receivable Agreement and utilizing the current income tax expense (benefit), as described above, when determining After-tax DE is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to shareholders. Assets Under Management (“AUM”) represents the sum of: i) fair value of the investments and financial instruments held by our private equity, credit and real estate funds (including fund-level asset-related leverage), other than as described below, as well as related co-investment vehicles managed or advised by us, plus the capital that we are entitled to call from investors in those funds and vehicles, pursuant to the terms of their respective capital commitments, net of outstanding leverage associated with subscription-related credit facilities, and including capital commitments to funds that have yet to commence their investment periods; ii) the gross amount of assets (including leverage where applicable) for our real estate investment trusts and BDCs; iii) the net asset value of certain of our hedge funds; iv) the aggregate par amount of collateral assets, including principal cash, for our collateralized loan obligation vehicles; and v) IPO proceeds held in trust, excluding interest, as well as forward purchase agreements and proceeds associated with the private investment in public equity related to our Public SPACs upon the consummation of a business combination. Our definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds that we manage, or calculated pursuant to any regulatory definitions. AUM Not Yet Earning Fees represents the amount of capital commitments to TPG’s funds and co-investment vehicles that has not yet been invested or considered active, and as this capital is invested or activated, the fee-paying portion will be included in FAUM. AUM Subject to Fee Earning Growth represents capital commitments that when deployed have the ability to grow our fees through earning new management fees (AUM Not Yet Earning Fees) or when management fees can be charged at a higher rate as capital is invested or for certain funds as management fee rates increase during the life of a fund (FAUM Subject to Step- Up). Available capital is the aggregate amount of unfunded capital commitments and recallable distributions that partners have committed to our funds and co-investment vehicles to fund future investments, as well as IPO and forward purchase agreement proceeds associated with our Public SPACs, and private investment in public equity commitments by investors upon the consummation of a business combination associated with our Public SPACs. Available capital is reduced for investments completed using fund-level subscription-related credit facilities; however, it is not reduced for investments that we have committed to make yet remain unfunded at the reporting date. We believe this measure is useful to investors as it provides additional insight into the amount of capital that is available to our investment funds and co-investment vehicles to make future investments. Capital invested is the aggregate amount of capital invested during a given period by our investment funds, co-investment vehicles, and CLOs, as well as SPACs in conjunction with the completion of a business combination and increases in gross assets of certain perpetual funds. It excludes certain hedge fund activity, but includes investments made using investment financing arrangements like credit facilities, as applicable. We believe this measure is useful to investors as it measures capital deployment across the firm. Capital raised is the aggregate amount of subscriptions and capital raised by our investment funds and co-investment vehicles during a given period, as well as the senior and subordinated notes issued through the firm’s CLOs and equity raised through our perpetual vehicles. We believe this measure is useful to investors as it measures the firm’s access to capital and ability to grow its management fee base. Catch-up fees, also known as out of period management fees, represent fees paid in any given period that are related to a prior period, usually due to a new limited partner coming into a fund in a subsequent close.
TPG | 54 Definitions (Cont’d) Distributable Earnings (“DE”) is used to assess performance and amounts potentially available for distributions to partners. DE is derived from and reconciled to, but not equivalent to, its most directly comparable U.S. GAAP measure of net income. DE differs from U.S. GAAP net income computed in accordance with U.S. GAAP in that it does not include: i) unrealized performance allocations and related compensation and benefit expense; ii) unrealized investment income; iii) equity-based compensation expense; iv) net income (loss) attributable to non-controlling interests in consolidated entities; or v) certain other items, such as contingent reserves. Distributable Earnings participating shares refers to the sum of (i) shares (Class A voting, Class A non-voting and TPG Operating Group Common Units) and (ii) share-based payment awards with non-forfeitable rights to dividends that benefit from the distribution of profits from TPG Operating Group at the end of any given period. This does not include shares or restricted stock units (i) whose dividends accrue to be paid on vesting or (ii) which do not participate in dividends. Excluded Assets refers to the assets and economic entitlements transferred to RemainCo listed in Schedule A to the master contribution agreement entered into in connection with the Reorganization (as defined herein), which primarily include (i) minority interests in certain sponsors unaffiliated with TPG, (ii) the right to certain performance allocations in TPG funds, (iii) certain co-invest interests, and (iv) cash. FAUM Subject to Step-Up represents capital raised within certain funds where the management fee rate increases once capital is invested or as a fund reaches a certain point in its life where the fee rate for certain investors increases. FAUM Subject to Step-Up is included within FAUM. Fee-Related Earnings (“FRE”) is a supplemental performance measure and is used to evaluate our business and make resource deployment and other operational decisions. FRE differs from net income computed in accordance with U.S. GAAP in that it adjusts for the items included in the calculation of DE and also adjusts to exclude: i) realized performance allocations and related compensation expense; ii) realized investment income from investments and financial instruments; iii) net interest (interest expense less interest income); iv) depreciation; v) amortization; and vi) certain non-core income and expenses. We use FRE to measure the ability of our business to cover compensation and operating expenses from fee revenues other than capital allocation-based income. The use of FRE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein. Fee-Related Earnings margin is defined as Fee-Related Earnings divided by Fee-Related Revenues. Fee-Related Expenses differs from expenses computed in accordance with U.S. GAAP in that it is net of certain reimbursement arrangements and does not include performance allocation compensation. Fee-related expenses is used in management’s review of the business. Fee-Related Revenues (“FRR”) is comprised of (i) management fees, (ii) fee-related performance revenues, (iii) transaction, monitoring and other fees, net, and (iv) other income. Fee-related performance revenues refers to incentive fees from perpetual capital vehicles that are: (i) measured and expected to be received on a recurring basis and (ii) not dependent on realization events from the underlying investments. Fee-related revenue differs from revenue computed in accordance with U.S. GAAP in that it excludes certain reimbursement expense arrangements. Fee Earning AUM (“FAUM”) represents only the AUM from which we are entitled to receive management fees. FAUM is the sum of all the individual fee bases that are used to calculate our management fees and differs from AUM in the following respects: (i) assets and commitments from which we are not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which the firm is entitled to receive only performance allocations or are otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in our credit and real estate funds, have different methodologies for calculating management fees that are not based on the fair value of the respective funds’ underlying investments. We believe this measure is useful to investors as it provides additional insight into the capital base upon which the firm earns management fees. Our definition of FAUM is not based on any definition of AUM or FAUM that is set forth in the agreements governing the firm’s investment funds and products that it manages. Investment Appreciation / (Depreciation) represents fund appreciation for our private equity and real estate funds and gross returns for our credit funds.
TPG | 55 Definitions (Cont’d) Loan Level Return, with respect to our CLOs, represents gross returns which are presented on a total return basis for invested assets held, excluding any financing costs or operating fees incurred and using a time-weighted return methodology. Returns over multiple periods are calculated by geometrically linking each period’s return over time. Net accrued performance represents both unrealized and undistributed performance allocations and fee-related performance revenues resulting from our general partner interests in our TPG funds. We believe this measure is useful to investors as it provides additional insight into the accrued performance to which the TPG Operating Group Common Unit holders are expected to receive. Non-GAAP Financial Measures represent financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP. We use these measures to assess the core operating performance of our business. Operating profit margin is defined as GAAP net income divided by GAAP total revenue. Performance Eligible AUM refers to the AUM that is currently, or may eventually, produce performance allocations or fee-related performance revenues. All funds for which we are entitled to receive a performance allocation incentive fee or fee-related performance revenue are included in Performance Eligible AUM. Performance Generating AUM refers to the AUM of funds we manage that are currently above their respective hurdle rate or preferred return, and profit of such funds are being allocated to, or earned by, us in accordance with the applicable limited partnership agreements or other governing agreements. Realizations represent distributions sourced from proceeds from the disposition of investments and current income, in addition to investment proceeds from Public SPACs in conjunction with the completion of a business combination. RemainCo refers to, collectively, Tarrant Remain Co I, L.P., a Delaware limited partnership, Tarrant Remain Co II, L.P., a Delaware limited partnership, and Tarrant Remain Co III, L.P., a Delaware limited partnership, which owns the Excluded Assets, and Tarrant Remain Co GP LLC, a Delaware limited liability company serving as their general partner. Reorganization refers to a series of actions completed by the owners of TPG Group Holdings and TPG Operating Group on January 12, 2022 as part of a corporate reorganization, in conjunction with an initial public offering (“IPO”) that was completed on January 18, 2022. TPG Operating Group refers to TPG Operating Group I, L.P., TPG Operating Group II, L.P. and TPG Operating Group III, L.P. TPG Partner Holdings refers to TPG Partner Holdings, L.P., a Delaware limited partnership, which is a TPG Partner Vehicle that indirectly owns substantially all of the economic interests of TPG Group Holdings, a TPG Partner Vehicle.