TPG affiliate raises $350m for ag-focused vehicle – exclusive

Three LPs have confirmed to Agri Investor they have made commitments totaling a combined $350m to a fund that launched in December.

TPG Sixth Street Partners, a $33 billion credit and special situations-focused affiliate of Dallas-headquartered TPG, has raised at least $350 million for an agriculture-focused investment vehicle.

A Securities and Exchange Commission filing shows a fund called TSSP Agriculture Partners was launched in late 2019. Agri Investor can confirm that at least three LPs have made commitments to TAP.

The $65 billion Alaska Permanent Fund Corporation has made a $50 million commitment, with separate commitments of $150 million each from the $49.3 billion Colorado Public Employees Retirement Association and the $74.7 billion State of Michigan Retirement Systems.

TSSP and TPG declined to comment.

On its website, TSSP lists agriculture as one of 10 sectors with dedicated “sector franchises” housed within the Adjacencies Platform, which is one of five components constituting the unit.

In an organizational chart included within a September 2019 presentation to the $868 million Imperial County Employees Retirement Association, an entity called “Agriculture Partners” is listed underneath the “defensive yield”, “stressed opportunities” and “distressed non-control opportunities” units that make up TSSP’s Adjacencies Platform. In a footnote of the organizational chart, TSSP clarified that at the time of the presentation, “the Agriculture Partners platform is prospective and not yet formed.”

Agri Investor understands this is the fund that TSSP is now raising.

The chart also shows the Adjacencies Platform is among the four of five platforms capable of drawing capital from TSSP’s open-ended Adjacent Opportunities vehicles, the fourth iteration of which managed $9.4 billion as of July 2019.

Over the past two years, several market sources have highlighted to Agri Investor the role of TSSP managing director Chad Hutchinson in formulating TPG’s approach to agriculture.

Hutchinson, along with senior TSSP executives Brian D’Arcy and Matt Dillard, participated in telephone calls in January and February 2019 with Alaska Permanent Fund Corporation portfolio manager Ross Alexander and senior portfolio manager Jared Brimberry, about a fund opportunity, according to materials released by the sovereign wealth fund.

Some sources expressed confusion as to whether Hutchinson – who previously played professional football and baseball – was investing as part of TPG’s Rise Fund, which had identified agriculture as being among key sectors of focus.

Though both ag-focused investments from the Rise Fund series thus far have focused on dairy in the developing world, the then sector-lead Joy Basu told Agri Investor in July 2017 that developed markets were also relevant to TPG’s interest in agricultural investments.

One market source told Agri Investor that Hutchinson and his team at TSSP have been actively exploring regenerative agricultural opportunities on the West Coast, including Washington State apple properties, for the past two years.

“I don’t have any examples of actual transactions. I just know from secondhand accounts that when I ask: ‘Who is bidding on that property? I hear TPG thrown around, along with the usual suspects like Prudential,” the source said. “Now that they’ve raised a proper vehicle and are building a team, they are really starting to formalize their work around the space, which I think is great.”

A source familiar with the TSSP Agriculture Partners strategy told Agri Investor that debt is not a particular focus for the vehicle, which instead focuses on acquisition of long-term, yielding agricultural assets. TSSP has been investing in agricultural assets through other investment vehicles as part of the same strategy since about 2014, the source added.