TPG Inc. (TPG) FY 2024 MD&A

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information presented in our historical financial statements and the related notes included elsewhere in this report. In addition to historical information, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and elsewhere in this report, particularly in “Cautionary Note Regarding Forward-Looking Statements,” and “Item 1A.—Risk Factors”. We assume no obligation to update any of these forward-looking statements.

On January 12, 2022, we completed a corporate reorganization (the “Reorganization”), which included a corporate conversion of TPG Partners, LLC to a Delaware corporation named TPG Inc., in conjunction with an initial public offering (the “IPO”) of our Class A common stock. The IPO closed on January 18, 2022. Unless the context suggests otherwise, references in this report to “TPG”, “the Company”, “we”, “us” and “our” refer (i) prior to the completion of the Reorganization and IPO to TPG Group Holdings SBS, L.P. and its consolidated subsidiaries and (ii) from and after the completion of the Reorganization and IPO to TPG Inc. and its consolidated subsidiaries.

We completed the Acquisition on November 1, 2023. Accordingly, the results of TPG Angelo Gordon included in our consolidated results of operations for the year ended December 31, 2023 are from November 1, 2023 through December 31, 2023.

The following discussion includes a comparison of our results for the years ended December 31, 2024 and 2023. For a discussion of our results for the year ended December 31, 2022 and a comparison of results for the years ended December 31, 2023 and 2022, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, which specific discussion is incorporated herein by reference.

Business Overview

We are a leading global alternative asset manager with $245.9 billion in assets under management (“AUM”) as of December 31, 2024. We have built our firm through years of successful innovation and growth, and believe that we have delivered attractive risk-adjusted returns to our clients and established a premier investment business focused on the fastest-growing segments of the alternative asset management industry. We believe our distinctive business approach and diversified array of innovative investment platforms position us well to continue generating highly profitable, sustainable growth.

Trends Affecting our Business

Changes in global economic conditions and regulatory or other governmental policies or actions can materially affect the values of funds managed by TPG, as well as our ability to source attractive investments and deploy the capital that we have raised. However, we believe our disciplined investment philosophy across our diversified investment platforms and our shared investment themes focusing on attractive and resilient sectors of the global economy has historically contributed to the stability of our performance throughout market cycles.

Economic dynamics and financial conditions provided an accommodating backdrop for global markets in 2024, with the combination of moderating inflation, easing monetary policy, continued economic growth and AI-related enthusiasm driving risk assets higher and credit spreads tighter.

U.S. economic activity continued to expand in 2024. Quarter-over-quarter, real gross domestic product (“GDP”) grew at an annualized rate of 1.4%, 3.0% and 3.1%, respectively, for the first three quarters of 2024. In aggregate, 2024 GDP is estimated to have grown 2.7% relative to 2023. The labor market remained strong, though the unemployment rate ticked up slightly to end the year at 4.1%, up from 3.7% as of the end of 2023.

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Despite the robust economic growth and resilience in the labor market, inflation in the United States moderated throughout 2024 but still remains elevated relative to the Federal Reserve long-term target of 2.0%. The December reading of the U.S. Consumer Price Index (“CPI”) showed prices increased 2.7% over the prior twelve months, a slower pace of growth than the 3.1% level observed as of the end of 2023. Similarly, core CPI, which excludes food and energy, fell to 3.3% annual growth as of the latest reading, down from 4.0% as of the end of 2023.

The trajectory of inflation towards the Federal Reserve’s 2.0% target provided the central bank confidence to reduce interest rates during the year for the first time since the onset of the COVID-19 pandemic. After holding target federal funds rate steady at 5.25%-5.50% for a year, the Federal Reserve cut rates by 50 basis points at its September 2024 meeting, followed by 25 basis point reductions at both its November and December 2024 meetings. As of the end of 2024, the federal funds target range sits at 4.25%-4.50%, with additional cuts expected in 2025.

The U.S. Treasury market was relatively volatile in 2024. The yield curve steepened throughout the year as yields at the short end of the curve fell in response to rate cuts by the Federal Reserve, while longer dated bonds sold off. Yields on the 10-Year Treasury ended the year 4.57%, up 69 basis points from the start of the year. 2-Year Treasury yields were flat year-over year, ending 2024 at 4.24%.

In corporate credit markets, both U.S. and European high yield generated positive performance in the fourth quarter of 2024. According to J.P. Morgan data, U.S. high yield gained 0.3% and the European market returned 1.8% during the three-month period. In the United States, high yield bond spreads tightened by 20 basis points to 325 basis points, while in Europe, high yield spreads tightened 48 basis points to end the quarter at 377 basis points. The high yield default rate, measured on a trailing twelve-month basis, declined modestly from 1.6% to 1.5% in the United States but increased from 2.7% to 3.3% in Europe. Additionally, the J.P. Morgan U.S. Leveraged Loan Index posted a 2.40% return, and the J.P. Morgan European Leveraged Loan Index posted a 2.1% return for the third quarter of 2024. From a spread and yield basis, the US Leveraged Loan Index ended the quarter at a yield of 8.2% and 426 basis point spread, while the European Leverage Loan Index ended the quarter at a yield of 7.1% and 480 basis point spread.

Major U.S. equity indices recorded significant gains during 2024, with the S&P 500, Nasdaq and Dow Jones rising 23.3%, 28.6% and 12.9%, respectively, during the year. Indices were led higher by a collection of mega-cap stocks, including Nvidia, Microsoft, Amazon, Apple, Alphabet, Meta and Tesla, which collectively represent approximately one third of the S&P 500 as of December 31, 2024—the highest level of concentration in the index’s history. Technology sectors outperformed during the year, driven by AI-related enthusiasm, with Communication Services and Information Technology S&P sectors gaining 38.9% and 35.7%, respectively. Materials, Healthcare and Real Estate sectors were relative laggards throughout the year, posting performances of (1.8%), 0.9% and 1.7%, respectively. Volatility in the U.S. equity market, as measured by the CBOE Volatility Index, was modestly higher year-over-year, ending 2024 at 17.4, up from 12.5 as of the end of 2023. Global equity markets rose over 2024, though lagged the United States, with the MSCI Europe Index rising 5.8%, the MSCI Asia Index rising 7.2% and the MSCI World Index gaining 17.0% during the year.

Organization

We are a holding company and our only business is to act as the owner of the entities serving as the general partner of the TPG Operating Group partnerships and our only material assets are Common Units representing approximately 30% of the outstanding Common Units and 100% of the interests in certain intermediate holding companies as of December 31, 2024. In our capacity as the sole indirect owner of the entities serving as the general partner of the TPG Operating Group partnerships, we indirectly control all of the TPG Operating Group’s business and affairs.

Acquisition of Angelo Gordon

On November 1, 2023, we acquired Angelo Gordon pursuant to the terms and subject to the conditions set forth in the Transaction Agreement. Pursuant to the Transaction Agreement, we acquired Angelo Gordon for both cash and non-cash consideration under U.S. GAAP equal to $1,143.4 million (the “Purchase Price”), comprised of:

•$740.7 million in cash paid at closing;

•$16.3 million paid during the year ended December 31, 2024 to the sellers of Angelo Gordon as a result of post close net working capital adjustments;

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•9.2 million vested Common Units (and an equal number of Class B common stock) and 43.8 million unvested Common Units which are deemed to be compensatory under U.S. GAAP;

•the rights to an aggregate cash payment, payable in three payments of up to $50.0 million each, reflecting an aggregate of $150.0 million (the “Aggregate Annual Cash Holdback Amount”); and

•the non-compensatory portion under U.S. GAAP of a total earnout payment of up to $400.0 million in value (the “Earnout Payment”), subject to the satisfaction of certain fee-related revenue (“FRR”) targets during the period beginning on January 1, 2026 and ending on December 31, 2026 (the “Measurement Period”).

Operating Segments

We operate our business in a single operating and reportable segment, as our CEO, who is our chief operating decision maker (the “CODM”), manages the business on a consolidated basis. We operate collaboratively across product lines through shared investment themes and shared support functions that span across product lines.

Basis of Accounting

We consolidate the financial results of TPG Inc., TPG Operating Group and its consolidated subsidiaries, management companies, the general partners of funds and entities that meet the definition of a variable interest entity (“VIE”) for which we are considered the primary beneficiary.

When an entity is consolidated, we reflect the accounts of the consolidated entity, including its assets, liabilities, revenues, expenses, investment income, cash flows and other amounts, on a gross basis. While the consolidation of an entity does not impact the amounts of net income attributable to controlling interests, the consolidation does impact the financial statement presentation in accordance with U.S. GAAP. This is a result of the fact that the accounts of the consolidated entities being reflected on a gross basis, with intercompany transactions eliminated, while the allocable share of those amounts that are attributable to third parties are reflected as single line items. The single line items in which the accounts attributable to third parties are recorded are presented as non-controlling interests on the Consolidated Statements of Financial Condition and net income (loss) attributable to non-controlling interests on the Consolidated Statements of Operations.

We are not required under U.S. GAAP to consolidate the majority of investment funds we advise in our Consolidated Financial Statements because we do not have a more than insignificant variable interest. Public SPACs are consolidated pursuant to U.S. GAAP in the relevant periods presented. Management fees and performance allocations from the consolidated Public SPACs are eliminated in the Consolidated Financial Statements. The performance of the consolidated Public SPACs is not necessarily consistent with or representative of the aggregate performance trends of our TPG investment funds.

Key Financial Measures

Our key financial and operating measures are discussed below.

Revenues

Fees and Other. Fees and other consists primarily of (i) management fees, (ii) monitoring fees, (iii) transaction fees, (iv) incentive fee income and (v) expense reimbursements from unconsolidated funds, portfolio companies and third parties. These fee arrangements are documented within the contractual terms of the governing agreements and are recognized when earned, which generally coincides with the period during which the related services are performed and in the case of transaction fees, upon closing of the transaction. Monitoring fees may provide for a termination payment following an initial public offering or change of control. These termination payments are recognized in the period in which the related transaction closes.

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Capital Allocation-Based Income (Loss). Capital allocation-based income (loss) is earned from our funds when we have (i) a general partner’s capital interest and (ii) performance allocations which entitle us to a disproportionate allocation of investment income or loss from investment funds. We are entitled to a performance allocation (typically 20%) based on cumulative fund or account performance to date, irrespective of whether such amounts have been realized. These performance allocations are subject to the achievement of preferred returns or high water marks, where applicable, in accordance with the terms set forth in the respective fund’s governing documents. We account for our investment balances in the TPG funds, including performance allocations, under the equity method of accounting because we are presumed to have significant influence as the general partner or managing member; however, we do not have control as defined by ASC Topic 810, Consolidation. The Company accounts for its general partner interests in capital allocation-based arrangements as financial instruments under ASC Topic 323, Investments – Equity Method and Joint Ventures as the general partner has significant governance rights in the TPG funds in which it invests which demonstrates significant influence. Accordingly, performance allocations are not deemed to be within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Expenses

Compensation and Benefits. Compensation and benefits expense includes (i) cash-based compensation and benefits, (ii) equity-based compensation and (iii) performance allocation compensation. Bonuses are accrued over the service period to which they relate. In addition, we have equity-based compensation arrangements that require certain TPG executives and employees to vest over a service period of generally one to five years, which under U.S. GAAP will result in compensation charges over current and future periods. In connection with our IPO and subsequent acquisition, we granted restricted stock units (“RSUs”) to executives and employees. Distributions of performance allocations in the legal form of equity made directly or indirectly to our partners and professionals are allocated and distributed, when realized, pro rata based on ownership percentages in the underlying investment partnership. These distributions were accounted for as distributions on the equity held by such partners rather than as compensation and benefits expense prior to the Reorganization and IPO and are now accounted for as performance allocation compensation.

General, Administrative and Other. General and administrative expenses include costs primarily related to professional services, occupancy, travel, communication and information services and other general operating items.

Depreciation and Amortization. Depreciation and amortization of tenant improvements, furniture and equipment and intangible assets are expensed on a straight-line basis over the useful life of the asset.

Interest Expense. Interest expense includes interest paid and accrued on our outstanding debt and the amortization of deferred financing costs.

Expenses of Consolidated Public SPACs. Expenses of consolidated Public SPACs consist of interest expense and other expenses related primarily to professional services fees, research expenses, trustee fees, travel expenses and other costs associated with organizing and offering these entities.

Investment Income

Net Gains (Losses) from Investment Activities. Realized gains (losses) may be recognized when we redeem all or a portion of an investment interest or when we receive a distribution of capital. Unrealized gains (losses) result from the appreciation (depreciation) in the fair value of our investments. Fluctuations in net gains (losses) from investment activities between reporting periods are primarily driven by changes in the fair value of our investment portfolio and, to a lesser extent, the gains (losses) on investments disposed of during the period. The fair value of, as well as the ability to recognize gains (losses) from, our investments is significantly impacted by the global financial markets. This impact affects the net gains (losses) from investment activities recognized in any given period. Upon the disposition of an investment, previously recognized unrealized gains (losses) are reversed and an offsetting realized gain (loss) is recognized in the period in which the investment is sold. Since our investments are carried at fair value, fluctuations between periods could be significant due to changes to the inputs to our valuation process over time.

Interest, Dividends and Other. Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established.

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Investment and Other Income of Consolidated Public SPACs. Investment and other income of consolidated Public SPACs include changes in the fair value of derivative contracts entered into by our consolidated Public SPAC entities, which are included in current period earnings and interest, dividend and other income earned by the consolidated Public SPACs.

Income Tax Expense

The Company is treated as a corporation for U.S. federal and state income tax purposes. We are subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of taxable income generated by the TPG Operating Group partnerships.

Non-Controlling Interests

For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than TPG. The aggregate of the income or loss and corresponding equity that is not owned by us is included in non-controlling interests in the Consolidated Financial Statements.

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Key Components of our Results of Operations

Results of Operations

The following table provides information regarding our consolidated results of operations for the periods presented:

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(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenues

Revenues consisted of the following for the years ended December 31, 2024 and 2023:

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(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Fees and other revenues increased by $552.4 million, or 36%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. This change resulted from a $450.0 million increase in management fees, a $90.1 million increase in transaction, monitoring and other fees and a $12.3 million increase in expense reimbursements and other.

Management Fees. Management fees increased by $450.0 million, or 38%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This change was primarily driven by an increase of $458.9 million in management fees from TPG Angelo Gordon, acquired in November 2023. During the year ended December 31, 2024, we recognized additional fees of $283.5 million from TPG AG Credit, primarily driven by MVP Fund, MMDL III, MMDL IV and Credit Solutions II, and $175.4 million from TPG AG Real Estate, primarily driven by Realty Value XI, Realty Value X, Asia Realty V, Europe Realty IV, Net Lease Realty III and Net Lease Realty IV.

Management fees from our Capital platform decreased $19.8 million during the year ended December 31, 2024, primarily driven by a reduction of invested capital due to realizations for TPG VII and a step down in fee basis from committed to invested capital for TPG VIII during the fourth quarter of 2024. During the fourth quarter of 2023, TPG IX and THP II recognized catch-up fees from new capital raised. These decreases were partially offset by additional fees from Asia VIII due to fee earning capital raised and catch-up fees earned during the twelve months ended December 31, 2024.

Management fees from our Growth platform increased $10.9 million primarily attributable to Growth VI, which was activated during the fourth quarter of 2023, partially offset by a decrease in fees from Growth V, which primarily resulted from a step down in fee basis from committed to invested capital during the first quarter of 2024.

Management fees from our Impact platform decreased $2.1 million, primarily attributable to Rise Climate I, which had a step down in fee basis from committed to invested capital during the fourth quarter of 2024, partially offset by additional fees from Rise Climate II, which was activated during the third quarter of 2024.

Management fees from our Real Estate platform decreased $8.5 million, primarily attributable to TREP III, which had a step down in fee basis from committed to invested capital in the second quarter of 2023.

Management fees from our Market Solutions platform increased $9.9 million primarily attributable to TGS and NewQuest V as a result of additional fee earning capital raised during the twelve months ended December 31, 2024, partially offset by a decrease in fees from TPEP as a result of a decrease in fee earning AUM.

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Certain management fees totaling $50.4 million earned during the year ended December 31, 2024 were considered catch-up fees as a result of additional capital commitments from limited partners. Catch-up fees primarily consisted of $21.9 million for Asia VIII and $8.7 million for TGS.

Transaction, Monitoring and Other Fees. Transaction, monitoring and other fees increased by $90.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily driven by a $42.0 million increase in our Market Solutions platform as a result of increased capital markets activity among our portfolio companies involving our broker-dealer and a $18.8 million increase in monitoring fees earned from portfolio companies primarily in our Capital platform.

Expense Reimbursements and Other. Expense reimbursements and other increased by $12.3 million, or 5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily due to the acquisition of TPG Angelo Gordon in November 2023, partially offset by primarily lower income from our former affiliate. As of April 2024, the contracts to provide services to such party have ended.

Performance Allocations. Performance allocations increased by $493.5 million, or 61%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. Realized performance allocation gains for the years ended December 31, 2024 and 2023 totaled $955.4 million and $582.2 million, respectively. Unrealized performance allocation gains for the years ended December 31, 2024 and 2023 totaled $346.4 million and $226.0 million, respectively.

The table below highlights performance allocations for the years ended December 31, 2024 and 2023, and separates the entities listed into two categories to reflect the Reorganization: (i) TPG general partner entities from which the TPG Operating Group Common Unit holders are expected to receive a 20% performance allocation and (ii) TPG general partner entities from which the TPG Operating Group Common Unit holders are not expected to receive any performance allocation.

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(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

(2)After the Reorganization, we retained an economic interest in performance allocations from the Growth III and Asia VI general partner entities, which entitles us to a performance allocation equal to 10%; however, we allocate the full amount as performance allocation compensation expense. As such, net income available to controlling interest holders is zero for each of these funds following the Reorganization.

(3)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.

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Performance allocation income was $1,301.8 million for year ended December 31, 2024 compared to $808.2 million for year ended December 31, 2023. This change was primarily driven by higher performance allocations from our Capital, Growth and Real Estate platforms during the year ended December 31, 2024 compared to the year ended December 31, 2023, and from the acquisition of TPG Angelo Gordon in November 2023, which contributed $301.6 million of net gains during the year ended December 31, 2024.

Performance allocation income from our Capital platform was $560.6 million for the year ended December 31, 2024 compared to $438.5 million for the year ended December 31, 2023. Performance allocation income for the year ended December 31, 2024 was largely driven by gains of $236.2 million from TPG VIII, $176.9 million from TPG VII and $174.8 million from TPG IX, partially offset by losses of $73.6 million from Asia VI and $56.4 million from Asia VII. Performance allocation income for the year ended December 31, 2023 was primarily driven by gains of $318.9 million from TPG VIII and $60.9 million from THP I, partially offset by losses of $48.4 million from Asia VI.

Performance allocation income from our Growth platform was $362.4 million for the year ended December 31, 2024 compared to $121.7 million for the year ended December 31, 2023. Performance allocation income for the year ended December 31, 2024 was primarily driven by $156.8 million from Growth IV, $120.8 million from Growth V and $83.6 million from TTAD II. Performance allocation income for the year ended December 31, 2023 was primarily driven by gains of $80.8 million from Growth V and $64.4 million from Growth IV.

Performance allocation income from our Impact platform was $135.2 million for the year ended December 31, 2024 compared to $229.6 million for the year ended December 31, 2023. Performance allocation income for the year ended December 31, 2024 was largely driven by gains of $63.9 million from Rise III, $45.2 million from Rise Climate I and $41.6 million from Rise II, partially offset by losses of $15.5 million from Rise I. Performance allocation income for the year ended December 31, 2023 was primarily driven by gains of $177.3 million from Rise Climate I and $55.9 million from Rise II.

TPG AG Credit generated income of $406.5 million primarily attributable to $81.1 million from Credit Solutions II, $68.8 million from MVP, $37.7 million from MMDL IV, $25.7 million from ABC Fund and $20.8 million from Essential Housing II. TPG AG Real Estate generated net losses of $105.0 million primarily attributable to $90.2 million from Realty Value X, $31.9 million from Europe Realty II, $29.9 million from Asia Realty IV and $12.5 million from Realty VIII, which were partially offset by gains of $41.8 million from Net Lease Realty III.

TREP III within the Real Estate platform generated $21.2 million of gains during the year ended December 31, 2024 compared to a losses of $73.3 million during the year ended December 31, 2023.

Performance allocation losses of $29.7 million from our Market Solutions platform were primarily driven by $32.1 million of loss from NewQuest IV and $29.4 million from NewQuest III, partially offset by net gains of $16.0 million from TPEP during the year ended December 31, 2024. Performance allocation income for the year ended December 31, 2023 was primarily driven by gains of $33.5 million from TPEP and $8.8 million from NewQuest V, partially offset by net losses of $20.2 million from NewQuest III.

TPG Operating Group Excluded generated losses of $51.4 million during the year ended December 31, 2024 compared to a loss of $58.8 million during the year ended December 31, 2023. Performance allocation losses for the year ended December 31, 2024 were primarily driven by losses of $27.2 million from Biotech III from our Growth platform and $9.5 million from Asia V from our Capital platform, partially offset by gains of $5.3 million from Biotech V from our Growth platform. Performance allocation losses from TPG Operating Group Excluded for the year ended December 31, 2023 was primarily driven by losses of $24.6 million from TPG VI and $24.4 million from Asia V from our Capital platform and $22.9 million from Gator within our Growth platform, offset by gains of $12.6 million from Biotech III within our Growth platform.

As of December 31, 2024, accrued performance allocations presented as investments in the Consolidated Statement of Financial Condition for Common Unit holders TPG Operating Group shared TPG general partner entities totaled $5.7 billion. As of December 31, 2024, accrued performance allocations presented as investments in the Consolidated Statement of Financial Condition for Common Unit holders TPG Operating Group excluded TPG general partner entities totaled $0.3 billion.

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Capital Interests. Capital interests income increased by $64.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily attributable to gains from our investments in TPG VII, TPG VIII, TPG IX, Rise III, TRTX, Growth V and MVP Fund, offset by losses from our investment in Asia VI and Asia VII during the year ended December 31, 2024. During the year ended December 31, 2023, we recognized gains on our investments in TPG VII, TPG VIII and Rise Climate I offset by losses from our investments in Asia VI.

Expenses

Cash-Based Compensation and Benefits. Cash-based compensation and benefits expense increased by $288.0 million, or 53%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the increase in headcount due to the acquisition of TPG Angelo Gordon in November 2023.

Equity-based Compensation. Equity-based compensation expense increased by $351.4 million, or 54%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily driven by an increase in compensatory equity awards under U.S. GAAP associated with the TPG Angelo Gordon acquisition, and an increase in compensatory RSU grants to TPG employees, certain of our executives and TPG Angelo Gordon employees, as described in Note 19 to the Consolidated Financial Statements.

Performance Allocation Compensation. Performance allocation compensation increased by $338.4 million, or 57%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily attributable to the increase in performance allocations that drives compensation attributable to our partners and professionals.

General, Administrative and Other. General and administrative expenses increased by $101.2 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily driven by the increase in information technology costs, rent expenses and other administrative costs from TPG Angelo Gordon, which was acquired in November 2023.

Depreciation and Amortization. Depreciation and amortization increased by $87.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily due to the amortization of intangible assets resulting from the acquisition of TPG Angelo Gordon in November 2023.

Interest Expense. Interest expense increased by $49.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to additional interest expense on our Senior Notes and Subordinated Notes issued during the year ended December 31, 2024, as described in Note 12 to the Consolidated Financial Statements, and higher interest rates on certain borrowings.

Expenses of Consolidated Public SPACs. Expenses of consolidated Public SPACs decreased by $1.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was due to the redemption of all outstanding shares of the Public SPACs during the year ended December 31, 2023.

Net (Losses) Gains from Investment Activities. Net (losses) gains from investment activities was a loss of $29.3 million for year ended December 31, 2024 compared to a gain of $6.6 million for the year ended December 31, 2023. This change was primarily attributable to a net loss of $26.8 million from our investment in Nerdy Inc. (“NRDY”) during the year ended December 31, 2024.

Interest, Dividends and Other. Interest, dividends and other increased by $40.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This change was primarily driven by additional interest income and dividend income from TPG Angelo Gordon, which was acquired in November 2023.

Investment and Other Income of Consolidated Public SPACs. Investment and other income of consolidated Public SPACs recognized during the year ended December 31, 2023 was related to the interest income earned on the Assets held in Trust Account and the unrealized losses on derivative instruments warrants issued by the consolidated Public SPAC entities and forward purchase agreements held by third parties. As of December 31, 2023, we no longer hold any Assets held in Trust Accounts or have any derivative liabilities associated with Public SPACs in our Consolidated Financial Statements due to the redemption of the outstanding shares of the Public SPACs during the year ended December 31, 2023.

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Income Tax Expense. Income tax expense decreased by $8.2 million or 14% for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to income tax expense in connection with an increase in valuation allowance during the year ended December 31, 2023 as compared to an income tax benefit in connection with a decrease in valuation allowance during the year ended December 31, 2024, offset by an increase in certain compensation expenses that are not tax deductible incurred during the year ended December 31, 2024.

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Unaudited Condensed Consolidated Statements of Financial Condition (U.S. GAAP basis)

Cash and cash equivalents increased $142.8 million during the year ended December 31, 2024 primarily due to $351.0 million of proceeds from our Senior Notes and Subordinated Notes offerings and our 364-Day Credit Facility, net of repayment of our outstanding borrowings under our Senior Unsecured Revolving Credit Facility and Senior Unsecured Term Loan, and cash generated from our operating activities, partially offset by payments of dividends and distributions to our Class A common stockholders and to holders of non-controlling interests in subsidiaries.

Investments increased $779.2 million during the year ended December 31, 2024 primarily due to net capital allocation-based income of $1,413.0 million and purchases of $862.8 million, which were partially offset by proceeds of $1,460.5 million.

Other assets increased $331.2 million during the year ended December 31, 2024 primarily due to the deferred tax assets recorded in connection with the exchange of Common Units described in Note 20 to the Consolidated Financial Statements.

Debt obligations increased $336.9 million during the year ended December 31, 2024 primarily due to the Senior Notes and Subordinated Notes offerings and borrowings under our 364-Day Credit Facility, offset by repayment of our outstanding borrowings under our Senior Unsecured Revolving Credit Facility and Senior Unsecured Term Loan.

Due to affiliates increased $322.0 million during the year ended December 31, 2024 primarily due to an increase of $308.9 million in expected payments to be made in future years in connection with certain exchanges of Common Units for Class A common stock subject to our Tax Receivable Agreement.

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Accrued performance allocation compensation increased $280.5 million for the year ended December 31, 2024, primarily attributable to net increases in performance fee compensation expense of $930.1 million, partially offset by settlements of performance allocation compensation of $639.7 million during the year ended December 31, 2024.

Non-GAAP Financial Measures

Distributable Earnings. 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 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.

While we believe that the inclusion or exclusion of the aforementioned U.S. GAAP income statement items provides investors with a meaningful indication of our core operating performance, the use of DE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein. This measure supplements U.S. GAAP net income and should be considered in addition to and not in lieu of the results of operations presented in accordance with U.S. GAAP discussed further under “—Key Components of our Results of Operations—Results of Operations” prepared in accordance with U.S. GAAP.

After-Tax Distributable Earnings. 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 stockholders 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, which is recorded within due to affiliates and other liabilities in our Consolidated Statements of Financial Condition. 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.

We believe that while the inclusion or exclusion of the aforementioned U.S. GAAP income statement items provides investors with a meaningful indication of our core operating performance, the use of After-tax DE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein. This measure supplements U.S. GAAP net income and should be considered in addition to and not in lieu of the results of operations presented in accordance with U.S. GAAP discussed further under “—Key Components of our Results of Operations—Results of Operations.”

Fee-Related Earnings. 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.

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Fee-Related Revenues. Fee-related revenues (“FRR”) is a component of FRE. Fee-related revenues 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 revenues differs from revenue computed in accordance with U.S. GAAP in that it excludes certain reimbursement expense arrangements. Refer to “—Reconciliation to U.S. GAAP Measures” to the comparable line items on the Consolidated Statements of Operations.

Fee-Related Expenses. Fee-related expenses is a component of FRE. 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. Refer to “—Reconciliation to U.S. GAAP Measures” to the comparable line items on the Consolidated Statements of Operations.

Fee-related revenues and fee-related expenses are presented separately in our calculation of non-GAAP measures in order to better illustrate the profitability of our FRE. The use of fee-related revenues and FRE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein.

Our calculations of DE, FRE, fee-related revenues and fee-related expenses may differ from the calculations of other investment managers. As a result, these measures may not be comparable to similar measures presented by other investment managers.

The following table sets forth our total FRE and DE for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Fee-Related Revenues

Fee-related revenues increased by $494.2 million, or 37%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to additional management fees of $447.0 million.

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Management Fees

The following table presents management fees in our platforms for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Management fees increased by $447.0 million, or 38%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This change was primarily driven by the increase of $436.6 million in management fees from TPG Angelo Gordon, acquired in November 2023. During the year ended December 31, 2024, we recorded $311.0 million in fees from TPG AG Credit, primarily driven by MVP Fund, MMDL III, MMDL IV and Credit Solutions II, and $209.6 million from TPG AG Real Estate, primarily driven by Realty Value XI, Realty Value X, Asia Realty V, Europe Realty IV, Net Lease Realty III and Net Lease Realty IV.

Management fees from our Capital platform increased $0.6 million during the year ended December 31, 2024. Fee earning capital raised during the year ended December 31, 2024 resulted in additional fees from Asia VIII, partially offset by catch-up fees earned during the fourth quarter of 2023 from TPG IX and realizations from TPG AAF in the third quarter of 2023.

Management fees from our Growth platform increased $12.0 million mainly due to Growth VI, which was activated during the fourth quarter of 2023, partially offset by a decrease in fees from Growth V largely due to a step down in fee basis from committed to invested capital during the first quarter of 2024.

Management fees from our Impact platform decreased $2.4 million, primarily attributable to Rise Climate I, which had a step down in fee basis from committed to invested capital during the fourth quarter of 2024, partially offset by additional fees from Rise Climate II, which was activated during the third quarter of 2024.

Management fees from our Real Estate platform decreased $8.5 million primarily due to TREP III, which had a step down in fee basis from committed to invested capital in the second quarter of 2023.

Management fees from our Market Solutions platform increased $8.8 million primarily due to TGS and NewQuest V as a result of additional fee earning capital raised during the twelve months ended December 31, 2024, partially offset by a decrease in fees from TPEP as a result of a decrease in fee earning AUM.

Certain management fees totaling $50.4 million earned during the year ended December 31, 2024, were considered catch-up fees as a result of additional capital commitments from limited partners. Catch-up fees primarily consisted of $21.9 million for Asia VIII and $8.7 million for TGS.

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Fee-related Performance Revenues

The following table presents fee-related performance revenues for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Fee-related performance revenues increased $31.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to the addition of TCAP and an MMDL SMA as part of the acquisition of TPG Angelo Gordon in November 2023.

Transaction, Monitoring and Other Fees, Net

The following table presents transaction, monitoring and other fees, net in our platforms for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Transaction, monitoring and other fees, net increased by $39.9 million, or 37%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily attributable to an increase in fees received by our Market Solutions platform as a result of increased capital markets activity among our portfolio companies involving our broker-dealer.

Other Income

The following table presents other income for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

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Total other income decreased by $24.1 million, or 49%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to lower income from our former affiliate. As of April 2024, the contracts to provide services to such party have ended.

Fee-Related Expenses

Fee-related expenses increased by $336.3 million, or 46%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, comprised primarily of higher cash-based compensation and benefits, net of $236.7 million and increased operating expenses, net of $84.5 million.

Cash-based Compensation and Benefits, Net

The following table presents cash-based compensation and benefits, net for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Total cash-based compensation and benefits, net increased by $236.7 million, or 52%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the increase in headcount due to the acquisition of TPG Angelo Gordon in November 2023. These increases were partially offset by an increase in compensation reimbursements related to services provided to certain fund and portfolio companies of $16.1 million.

Fee-related Performance Compensation

The following table presents fee-related performance compensation for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Total fee-related performance compensation increased by $15.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to fees generated by TCAP and certain SMAs, which were part of the acquisition of TPG Angelo Gordon in November 2023.

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Operating Expenses, Net

Operating expenses, net includes general and administrative expenses as well as reimbursements for professional services and travel expenses related to investment management and advisory services provided to investment funds that we manage and monitoring services provided to our portfolio companies. Operating expenses, net were $361.7 million and $277.3 million for the years ended December 31, 2024 and 2023, respectively, with the increase of $84.5 million primarily driven by the increase in information technology costs, rent expenses and other administrative costs from TPG Angelo Gordon, which was acquired in November 2023.

Realized Performance Allocations, Net

The following table presents realized performance allocations, net from our platforms for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Realized performance allocations, net of $194.6 million for the year ended December 31, 2024 were largely generated from realizations of $48.3 million from TPG VIII and $11.5 million from TPG VII in the Capital platform, $27.9 million from Growth IV in the Growth platform, $17.8 million from Rise Climate I in the Impact platform, and $14.4 million from MVP Fund and $13.5 million from MMDL IV in TPG AG Credit. This activity included realizations sourced from portfolio companies such as Global Music Rights, Azoff Music, Nextracker, DirecTV and Viking Cruises.

Realized Investment Income and Other, Net

The following table presents realized investment income and other, net for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Realized investment income and other, net increased by $39.5 million, or 84%, due to a decrease in non-core expenses of $39.2 million.

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Depreciation

Depreciation expense increased $13.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to the acquisition of TPG Angelo Gordon.

Interest Expense, Net

The following table presents interest expense, net for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

The increase in interest expense, net during the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to additional interest expense on our Senior Notes and Subordinated Notes issued during 2024.

Distributable Earnings

The increase in Distributable Earnings for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to a 26% increase in our Fee-Related Earnings and an increase in realized performance allocations, net, partially offset by an increase in interest expense, net.

Income Taxes

Income taxes increased $14.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to an increase in distributable earnings allocable to TPG Inc.

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Unaudited Non-GAAP Balance Sheet Measures

Book assets, book liabilities and net book value are non-GAAP performance measures of TPG Operating Group’s assets, liabilities and equity on a deconsolidated basis which reflects our investments in subsidiaries as equity method investments. Additionally, the book assets, book liabilities and net book value include the tax assets and liabilities of TPG Inc. We utilize these measures to assess the unrealized value of our book assets after deducting for book liabilities as well as assess our indirect interest in accrued performance allocations from our funds and our co-investments in our funds and third-party investments. We believe these measures are useful to investors as they provide additional insight into the net assets of the TPG Operating Group on a deconsolidated basis. These non-GAAP financial measures should not be considered as a substitute for, or superior to, similar financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may differ from the calculations of other alternative asset managers and, as a result, may not be comparable to similar measures presented by other companies. Refer to “—Reconciliation to U.S. GAAP Measures” for reconciliations of the Consolidated Statements of Financial Condition to the non-GAAP Balance Sheet.

The following table sets forth our non-GAAP book assets, book liabilities and net book value as of December 31, 2024 and December 31, 2023:

During the year ended December 31, 2024, net book value increased as a consequence of net income exceeding distribution and other equity transactions including tax payments on RSU settlements and the payment of dividend equivalents. Net income was driven by Fee Related Earnings and appreciation of accrued performance fee and coinvest positions led by TPG VII, TPG VIII, TPG IX, Growth IV, Growth V, AG Credit Solutions and AG Middle Marked Direct Lending.

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Reconciliation to U.S. GAAP Measures

The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP to non-GAAP financial measures for the years ended December 31, 2024 and 2023:

Revenue

Expenses

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Net income

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Balance sheet

The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP to non-GAAP financial measures as of December 31, 2024 and 2023:

___________

(1)Certain amounts were reclassified to reflect how we utilize our non-GAAP balance sheet measures. We separately analyze our investments on a non-GAAP basis between accrued performance fees and other investments, which consists of co-investments into our funds and other equity method investments. Additionally, we reclassified U.S. GAAP financial statement amounts due from affiliates and certain amounts within other assets, net for non-GAAP purposes and reclassified U.S. GAAP financial statement amounts due to affiliates and other liabilities within accounts payable, accrued expenses and other for non-GAAP purposes.

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Operating Metrics

We monitor certain operating metrics that are common to the alternative asset management industry and that we believe provide important data regarding our business. The following operating metrics do not include other investments that are not included in the TPG Operating Group.

Assets Under Management

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; and

iv.the aggregate par amount of collateral assets, including principal cash, for our collateralized loan obligation vehicles.

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.

The following table summarizes our AUM by platform as of December 31, 2024 and 2023:

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The table below presents rollforwards of our total AUM for the years ended December 31, 2024 and 2023:

___________

(1)Outflows represent redemptions and withdrawals.

(2)Changes in Investment Value and Other consists of changes in fair value, capital invested, available capital, and net fund-level asset related leverage activity plus other investment activities.

AUM increased approximately $24.2 billion during the year ended December 31, 2024. This change was driven by capital raised of $30.1 billion and net increases in investment value of $19.0 billion, partially offset by realizations of $22.9 billion. Capital raised was primarily attributable to Asia VIII within the Capital platform, Growth VI within the Growth platform, Rise Climate II and Rise Climate TI within the Impact platform, Credit Solutions III, MMDL V, and Essential Housing III within TPG AG Credit and TGS within the Market Solutions platform. These increases were partially offset by realizations of $22.9 billion primarily attributable to TPG VII, TPG VIII and Asia VII within the Capital platform, Growth IV within the Growth platform, Rise Climate I within the Impact platform, Credit Solutions II Dislocation A, MMDL IV, Essential Housing II and Credit Solutions II within TPG AG Credit and Asia Realty IV and Realty Value X within TPG AG Real Estate. AUM also increased due to investment appreciation during the year ended December 31, 2024.

Fee Earning Assets Under Management

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 we are 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 we earn 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 investment funds and products that we manage.

The following table summarizes our FAUM by platform as of December 31, 2024 and 2023:

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The table below presents rollforwards of our FAUM for the years ended December 31, 2024 and 2023:

___________

(1)Fee Earning Capital Raised represents capital raised by our funds for which management fees calculated based on commitments or subscriptions were activated during the period.

(2)Net Change in Investment Activity includes capital called 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 cost or value of investments.

(3)Outflows represent redemptions and withdrawals.

(4)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 from $136.8 billion as of December 31, 2023 to $141.3 billion as of December 31, 2024. This was driven by fee earning capital raised activity totaling $10.7 billion primarily attributable to the subsequent closings of Asia VIII within the Capital platform, which had its final close in April 2024, Growth VI within the Growth platform, which was activated during the fourth quarter of 2023, Rise Climate II and Rise Climate TI within the Impact platform, which had their initial closes during the third and fourth quarters of 2024, respectively, and TCAP within TPG AG Credit. For the year ended December 31, 2024, annualized weighted average management fees as a percentage of FAUM, which represent annualized management fees divided by the average of each applicable period’s FAUM, were 1.17%.

Net Accrued Performance

Net accrued performance represents both unrealized and undistributed performance allocations and fee-related performance revenues resulting from our general partner interests in investment funds that we manage. 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.

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The tables below summarize our net accrued performance by fund vintage year and platform as of December 31, 2024 and December 31, 2023:

Net accrued performance was primarily driven by TPG VII, TPG VIII, Asia VII, Growth IV, Growth V and Rise I as of December 31, 2024 and TPG VII, TPG VIII, Asia VI, Asia VII, Growth IV, Growth V, Rise I, Rise II and Rise Climate I as of December 31, 2023.

We also utilize Performance Generating AUM and Performance Eligible AUM as key metrics to understand AUM that could produce performance allocations or fee related performance revenues. 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. 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 totaled $163.4 billion and $150.8 billion as of December 31, 2024 and December 31, 2023, respectively. Across the investment funds that we manage, Performance Eligible AUM totaled $209.3 billion and $191.8 billion as of December 31, 2024 and December 31, 2023, respectively.

AUM Subject to Fee Earning Growth

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).

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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. 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.

The table below reflects AUM Subject to Fee Earning Growth by platform as of years ended December 31, 2024 and 2023:

As of December 31, 2024, AUM Not Yet Earning Fees was $19.2 billion, which primarily consisted of TPG VII, TPG VIII and Asia VII within the Capital platform, TTAD II and TDM within the Growth platform, Rise Climate I within the Impact platform, TREP III and TAC+ within the Real Estate platform, and MMDL V, Credit Solutions III and Essential Housing III within TPG AG Credit.

Associated with FAUM Subject to Step-Up, management fee rates for these respective underlying funds range between 0.24% and 1.75% and step-up to rates in the range of 0.25% and 1.75% after 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 as of December 31, 2024 relates primarily to TPG IX within the Capital platform, Credit Solutions II and MMDL V within TPG AG Credit and Realty Value XI and Asia Realty V within TPG AG Real Estate.

Capital Raised

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 our CLOs and equity raised through our perpetual vehicles. We believe this measure is useful to investors as it measures access to capital across TPG and our ability to grow our management fee base.

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The table below presents capital raised by platform for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Capital raised totaled approximately $30.1 billion for the year ended December 31, 2024. This was primarily attributable to the fundraising activities of Asia VIII within the Capital platform, Growth VI within the Growth platform, Rise Climate II and Rise Climate TI within the Impact platform, Credit Solutions III, MMDL V and Essential Housing III within TPG AG Credit and TGS within the Market Solutions platform during the year ended December 31, 2024.

Available Capital

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. Available capital is reduced for investments completed using fund-level subscription-related credit facilities. 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.

The table below presents available capital by platform as of December 31, 2024 and 2023:

Available capital totaled $57.6 billion as of December 31, 2024. This is primarily attributable to the available capital for TPG VII, TPG VIII, TPG IX, Asia VIII and THP II within the Capital platform, Growth VI within the Growth platform, Rise Climate I, Rise Climate II and Rise Climate TI within the Impact platform, MMDL V, Credit Solutions III and Essential Housing II within TPG AG Credit, Europe Realty IV, Realty Value XI and Asia Realty V within TPG AG Real Estate, TREP IV within the Real Estate platform and TGS within the Market Solutions platform.

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Capital Invested

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 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.

The table below presents capital invested by platform for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

Capital invested was $32.9 billion for the year ended December 31, 2024, which was primarily attributable to TPG IX and Asia VIII within the Capital platform, Growth VI within the Growth platform, Rise III and Rise Climate I within the Impact platform, Essential Housing III, MMDL V, TCAP, ABC Fund, MMDL Evergreen and Credit Solutions III within TPG AG Credit, Realty Value XI within TPG AG Real Estate and TREP IV within the Real Estate platform.

Realizations

Realizations represent proceeds from the disposition of investments and current income, and in the case of credit funds, distributions sourced from realization proceeds.

The table below presents realizations by platform for the years ended December 31, 2024 and 2023:

___________

(1)Includes amounts from TPG Angelo Gordon from November 1, 2023, the date of the Acquisition, through December 31, 2023.

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Realizations were $22.9 billion for the year ended December 31, 2024. This was primarily attributable to a higher pace of realization activities in TPG VII, TPG VIII and Asia VII within the Capital platform, Growth IV within the Growth platform, Rise Climate I within the Impact platform, Credit Solutions II Dislocation A, MMDL IV, Essential Housing II and Credit Solutions II within TPG AG Credit and Asia Realty IV and Realty Value X within TPG AG Real Estate during the year ended December 31, 2024.

Fund Performance Metrics

Fund performance information for our investment funds as of December 31, 2024 is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. These fund performance metrics do not include co-investment vehicles, SMAs or certain other legacy or discontinued funds. Additionally, these fund performance metrics exclude the firm’s CLOs and real estate investment trusts. The fund return information for individual funds reflected in this discussion and analysis is not necessarily indicative of our firmwide performance and is also not necessarily indicative of the future performance of any particular fund. An investment in us is not an investment in any of our funds. This track record presentation is unaudited and does not purport to represent the respective fund’s financial results in accordance with U.S. GAAP. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. See “Item 1A.Risk Factors—Risks Related to Our Business—Our funds’ historical returns should not be considered as indicative of our or our funds’ future results or of any returns expected on an investment in our Class A common stock.”

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The following tables reflect the performance of our selected funds as of December 31, 2024 ($ in millions):

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