Good morning, and welcome to TPG's Fourth Quarter and Full Year 2023 Earnings Conference Call. Currently, all callers have been placed in a listen-only mode. Following management's prepared remarks, the call will be open for your questions. Please be advised that today's call is being recorded. Please go to TPG's IR website to obtain the earnings materials. I will now turn the call over to Gary Stein, Head of Investor Relations at TPG. Thank you. You may begin.

Great. Thanks, operator, and welcome, everyone. Joining me this morning are Jon Winkelried, Chief Executive Officer; and Jack Weingart, Chief Financial Officer. In addition, our Executive Chairman and Co-Founder, Jim Coulter; and our President, Todd Sisitsky, will be available for the Q&A portion of this morning's call. I'd like to remind you this call may include forward-looking statements that do not guarantee future events or performance. Please refer to TPG's Earnings Release and SEC filings for factors that could cause actual results to differ materially from these statements. TPG undertakes no obligation to revise or update any forward-looking statements, except as required by law. Within our discussion and earnings release, we're presenting GAAP and non-GAAP measures, reflecting the close of the Angelo Gordon transaction on November 1, 2023. We also present pro forma GAAP and non-GAAP measures that assume the transaction closed on January 1, 2023. Please refer to TPG's earnings release for details on the pro forma financial information. We believe certain non-GAAP measures that we discuss on this call are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to the nearest GAAP figures in TPG's earnings release, which is available on our website. Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any TPG fund. Looking briefly at our results for the fourth quarter. We reported GAAP net income attributable to TPG Inc. of $13 million and after-tax distributable earnings of $206 million or $0.51 per share of Class A common stock. We declared a dividend of $0.44 per share of Class A common stock, which will be paid on March 8 to holders of record as of February 23. With that, I'll turn the call over to Jon.

Thanks, Gary. Good morning, everyone. 2023 was a transformative year for TPG, and I'll begin today by sharing several updates on our progress. On last February's earnings call, we laid out a growth agenda for the year that included three key components. First, scaling our existing strategies and in particular, completing several important fundraises; second, continuing our strong track record of driving organic growth and innovation; and third, expanding our business through targeted acquisitions. We're excited about the progress we've made in all three of these areas. Looking at our business today, we manage more than $220 billion across private equity, credit, and real estate, and we furthered our position as a scaled, differentiated investment firm. I'll review a few highlights from the past year and also discuss our outlook. First, as it relates to existing strategies, we have completed the fundraises for the next generation of our TPG Capital, Healthcare partners, and Rise funds. We have grown our fund sizes, vintage over vintage, across each of these campaigns, which is a significant accomplishment given the persistent industry headwinds in private equity fundraising. This is a direct result of TPG's differentiated investment strategies, outstanding performance track record, and strong and growing client relationships. Specifically, for TPG Capital 9 and Healthcare Partners 2, we held our final close with $15.6 billion of aggregate commitments, up 10% from the prior vintage. And for Rise 3, we closed on $2.7 billion, up 24%. In addition to expanding our existing relationships, we also added many new clients to TPG from around the world with notable progress in the Middle East and Asia. We believe these new client relationships create significant potential for embedded growth in successor funds, as well as the opportunity to expand engagement across additional TPG strategies and products. For our ongoing Capital Asia campaign, we have raised $4.3 billion of capital as of year-end and will hold a final close in the coming months. Our clients continue to express strong interest, and we expect the fund to be larger than its predecessor. Second, we continue to demonstrate our ability to grow organically by launching and scaling products in parts of the market where we have distinct competitive advantages. I'll highlight a few of these initiatives. Our new real estate credit strategy received more than $750 million of commitments and closed on approximately $650 million in the fourth quarter. We are now actively investing, and the current market backdrop is one of the most interesting environments we've seen since the early 2000s for real estate credit, given the dynamics of higher rates, declining asset values, and a significant pullback in commercial real estate lending. Our strategy is purpose-built for this part of the cycle, and we intend to continue to raise capital in 2024. Turning to climate. At COP 28 this past December, we announced a $1.5 billion commitment to the next generation of TPG Rise Climate Private Equity Funds from Altera, the UAE's $30 billion climate-focused investment manager. This includes a $1 billion commitment to our second Rise Climate Fund and a $500 million commitment to our new Global Solve initiative. The UAE selection of TPG as its first private equity partner is a testament to the strong brand and leadership position we've built in the Climate and Impact space. Within our Climate strategy, we are also preparing to launch our Inova Climate Transition Infrastructure Fund. And just last week, we announced that Scott Lebo will be joining TPG later this year as the Head of Infrastructure for TPG Rise Climate. Scott most recently served as a global co-head and co-CIO of infrastructure investing at Goldman Sachs, and we're excited for him to help bring our differentiated strategy to market. Finally, we closed the acquisition of Angelo Gordon in the fourth quarter, meaningfully expanding our capabilities across credit and real estate and further enhancing our presence in Europe and Asia. We believe the acquisition of Angelo Gordon will be a significant growth driver for the firm in several ways. One key area is furthering our penetration in high-growth distribution channels, such as private wealth and insurance. And so far this year, we have secured new distribution relationships for our direct lending BDC and Credit Solutions Fund with several large wirehouses and private banking partners. We are focused on delivering additional products that provide private wealth investors access to our strategies, and we look forward to sharing more with you in the future. We also continue to make progress on standing up new revenue opportunities and businesses that leverage the combined expertise and capabilities of TPG and AG. The most near term is the ability to generate incremental fee revenue from the integration of our Capital Markets business into TPG AG Credit, which is already well underway. Our strategic growth initiatives over the last few years have led to a step function change in our business. Through both organic innovation and the acquisition of AG, we have substantially expanded the breadth of our franchise across private equity, credit, real estate, and soon-to-be infrastructure. As a result, the cadence and consistency of our capital raising and overall growth profile have fundamentally changed. We will be in the market on a steadier, more consistent basis across both the Institutional and Private Wealth channels. Looking ahead, we expect our growth this year to be driven by five primary vectors, including: one, credit fundraising across all our TPG AG strategies; two, the newest vintages of our growth and Rise Climate private equity funds; three, the launch of our climate transition infrastructure strategy; four, the completion of several first-time fund raises, including real estate credit and GP secondaries; and five, new product and channel development. Turning to our fourth-quarter results, we had a strong end to the year with $8.8 billion of capital raised in the quarter, primarily across the campaigns I discussed earlier. We believe we are well positioned with $51 billion of dry powder to deploy into what we view as an improving market backdrop. You may remember that during our second quarter '23 earnings call, we discussed several factors that were contributing to a ramp-up in our transaction pipelines, including narrowing bid-ask spreads, greater receptivity among corporates to strategically realign their businesses, and GPs increasingly seeking creative solutions for monetizations. These forces have been accelerating, and TPG has continued to deploy capital by leveraging our long-dated themes and core strains, such as executing corporate carve-outs and structuring proprietary creative financing solutions. As we look ahead in areas such as real estate, we expect to see more attractive assets for sale this year that would otherwise typically not come to market as companies find themselves under increasing pressure for liquidity. In Private Equity, given TPG's deep sector focus, commitment to business building, and strong track record of structuring win-win transactions, we continue to be a partner of choice for companies looking to strategically reposition their businesses and help drive growth. And in Credit, as we mentioned during the TPG AG Teach-In, the opportunity set continues to expand, and we expect a significant increase in deployment this year, which will grow our base of fee-earning AUM. The origination pipeline is robust across all of our Credit platforms, as borrowers seek alternatives to public debt financing with greater flexibility to meet their needs. We also expect a more active M&A pipeline, as the economy continues to show signs of steadier growth, leading to new origination opportunities. Our investment teams have been very busy deploying nearly $12 billion in the fourth quarter. Deployment picked up significantly across our platforms in the second half of the year, and we invested over $22 billion of capital in 2023. We expect our robust pace of deployment to continue in 2024. Looking briefly at activity within our Private Equity strategies. For Capital Asia, 2023 was a record year for deployment, with investments closed in almost every region where we operate. In the fourth quarter alone, we closed three transactions, including a very interesting platform-building investment that combines several hospital groups in Southeast Asia. This unique transaction led by our existing portfolio company, Columbia, Asia, creates one of the largest hospital ecosystems in Southeast Asia and aligns with our thematic focus on building regional platforms of scale, with high strategic value. In our Growth platform, we expect to see greater deployment across both our Growth and Tech adjacencies funds in 2024, as companies address pressing needs for primary capital, as well as pressure for secondary liquidity. We raised $1.1 billion of capital for our sixth growth fund during the rolling first close in the quarter and activated the fund. Our Impact platform has remained extremely active, with a strong investment pace across both our Rise and Rise Climate funds. Our first Rise Climate Fund is now approximately 75% invested and reserved, across a diverse portfolio of 21 companies that grew revenue nearly 30% in 2023. Additionally, our two IPOs last year, Nextracker and Tata Technologies, have both traded up more than 100% from their respective IPO offer prices, and we recently monetized a portion of our ownership in Nextracker. We are well positioned with strong momentum, as we prepare to launch our second Climate Private Equity fund and new Climate Transition Infrastructure strategy. Turning to our Credit strategies. Our middle-market direct lending platform, TPG Twin Brook, has maintained its strong performance through a sector-driven strategy and disciplined approach in providing loans at the top of the capital structure with robust covenant protections. Despite the volatile market backdrop during 2023, Twin Brook had no realized credit losses and deployed nearly $3 billion of capital on a pro forma basis into more than 30 new companies and over 260 add-on investments to existing borrowers. Our Corporate Credit Strategy Credit Solutions continued to perform well during the quarter, contributing to its excellent full-year results. In 2023, both the U.S. high-yield and leveraged loan indices were up over 13%, and each of our active Credit Solutions funds outperformed these indices by several hundred basis points. In terms of capital activity, Credit Solutions invested more than $1.2 billion in the fourth quarter, notably in a number of bespoke, privately structured financing transactions and deployed nearly $2.7 billion of capital in 2023, both on a pro forma basis. In addition, our Essential Housing business originated financing projects during the year with more than $4 billion of aggregate land and site development costs. Turning to asset-based lending and specialty finance. These strategies have become an increasingly important part of the private credit ecosystem. Clients are looking to diversify underlying cash flows away from corporate EBITDA and shift fixed income allocations to price-structured credit opportunities. In addition, public securitized credit continues to trade with an attractive excess spread relative to corporate credit. Finally, last year's regional banking crisis further enhanced both the investment opportunity set and client interest in the space. As a result of the dislocation and traditional structured credit providers, we have already deployed more than 60% of TPG AG's and Norwell's asset-based private credit fund and more than 30 transactions, and we expect to scale this strategy over time. And in Real Estate, we continue to see compelling opportunities to acquire attractive assets from sellers in need of capital solutions. For example, in the fourth quarter, our TREP Fund acquired a majority interest in two Class A Industrial business parks in the Greater Toronto area, which we view as one of the best performing industrial markets in North America with a sub-2% vacancy rate and high barriers to entry. Additionally, TPG AG Real Estate had $7.3 billion of dry powder at year-end, with dedicated funds in the U.S., Europe, and Asia. With a global network of approximately 200 operating partners, TPG AG Real Estate is well positioned to deploy its flexible and opportunistic capital across a range of attractive opportunities. Finally, I want to highlight TPG Next, which completed its inaugural investment this quarter in the Visualized Group, a new investment manager. TPG will serve as a significant anchor investor in Visualized's private equity strategy and will provide the firm with institutional resources to support business building and scale. This strategic partnership is a strong example of our commitment to augmenting diverse leadership within our industry, and we look forward to continuing to see high-potential investment managers. Although we remain cautious due to an uncertain macro environment characterized by increasing valuations, anticipation of Fed policy decisions, and significant geopolitical tensions, 2024 is off to a very active start for TPG. We have a robust pipeline of interesting investment opportunities. We are engaged in high-quality dialogue with many existing and new clients, and we see a number of levers to drive further growth and innovation across our business. We have a lot of work to do this year, but I'm confident in our ability to continue to deliver for our clients and build long-term value for our shareholders. Now I'll turn it over to Jack to review our financial results.

Thank you, Jon. As Gary mentioned earlier, I'll be discussing our results today on an actual basis, which includes two months of TPG Angelo Gordon from the acquisition close date of November 1, through December 31. In our earnings release, we've also provided pro forma financials for the fourth quarter and full year 2023, which assumed the transaction closed on January 1, 2023. We ended the year with $222 billion of total assets under management, up 64% year-over-year. This was driven by $75 billion of acquired AUM, $16 billion of capital raised, and value creation of $7 billion, partially offset by $10 billion of realizations and $1 billion in outflows over the last 12 months. As Jon mentioned, we had a strong quarter for fundraising due to the final closes across our Capital and Rise funds, as well as the rolling first close of our growth fund. Fee earning AUM increased 76% year-over-year to $137 billion, and we had more than $51 billion of dry powder available to deploy, representing 38% of fee-earning AUM. We also had AUM subject to fee earning growth of $24 billion at the end of the year, of which $14 billion was not yet earning fees. This represents a significant embedded growth driver of potential management fee growth as we deploy this capital, particularly across our credit vehicles. Fee-related revenue was $465 million in the quarter, up 45% sequentially and 51% year-over-year and $1.3 billion for the year, up 23% from 2022. Management fees totaled $396 million in the quarter and grew 42% sequentially, due in part to the inclusion of TPG AG in our results, as well as substantial catch-up fees related to the final closes for the Capital and Rise funds. Transaction fees increased 79% sequentially and 20% year-over-year to $55 million in Q4. A record level and totaled $108 million for the full year. Our fourth-quarter transaction fees were elevated by the closing of several large transactions where TPG was the sole or lead arranger for the debt financing. As Jon noted, over time we expect to drive growth in transaction fee revenues as we expand our broker-dealer capabilities to TPG AG. However, Q1 is often a seasonally light quarter for deal closings, as we saw last year. And we expect that to be the case again this year. Fee-related earnings were $226 million for the fourth quarter, up 45% sequentially and 62% year-over-year, and $606 million for 2023, up 34% from 2022. Our FRE margin was 49% for the fourth quarter and 45% for the last 12 months, a 350 basis point improvement from 2022. On a pro forma basis, assuming the AG acquisition closed on January 1, our FRE margin would have been 47% for the fourth quarter and 40% for the full year. It's important to note that these pro forma margins were elevated by the significant catch-up fees and transaction revenues in the fourth quarter. As we've discussed previously, our normalized margin has blended down through the inclusion of TPG AG, and we now have a meaningful opportunity to drive profitable growth through our margin expansion. We expect our FRE margin to exceed 40% for the year in 2024, as we realize operating leverage and synergies from the integration and scaling of our business. While also investing in growth initiatives we've described. We will continue to maintain strong expense discipline and over the longer term, we expect our margin to scale back up to and exceed 45%. After-tax distributable earnings for the fourth quarter were $206 million or $0.51 per share of Class A common stock, including $19 million from realized performance allocations. Our realization activity last year reflected our bias in a volatile market to focus on building value in our relatively young portfolios, and we remained selective in our exit activity. That being said, as markets have begun to normalize, our pipeline of potential monetizations has increased. Assuming markets remain supportive, we expect realized performance allocations to increase in 2024. In the fourth quarter, we also incurred $18 million of non-core expenses related to the closing of the Angelo Gordon acquisition, which is included in our realized investment income and other line item. While we will continue to incur ongoing integration costs, we expect this to normalize now the transaction is closed. Turning to our non-GAAP balance sheet. We used a portion of our cash and revolver capacity to fund the closing of the AG transaction in the fourth quarter. We ended the year with $105 million of cash and cash equivalents, approximately $500 million drawn on a revolver, and $450 million of other long-term debt. As I've mentioned previously, we upsized our revolver from $700 million to $1.2 billion last September and currently have approximately $700 million of undrawn capacity. Our balance sheet post closing remains conservative, with moderate leverage and ample liquidity. Our net accrued performance balance at the end of the year was $891 million compared to $692 million in the third quarter. This 29% increase was driven by $141 million of accrued carry attributable to TPG AG at the acquisition date and the $77 million increase in the value of our investments, partially offset by $19 million in realized gains. While our operating model is FRE-centric, we have significant embedded performance-related earnings potential, and we expect our financial results will benefit from the eventual pickup in realizations. At the end of the year, our performance-eligible AUM totaled $192 billion or 87% of our total AUM, of which $151 billion was performance fee generating. Our portfolio has continued to demonstrate resilience through a period of high volatility, underpinned by our deep sector expertise and careful investment selection in assets with strong growth and durable margins. Our Private Equity portfolio, which includes our Capital, Growth, and Impact platforms, appreciated approximately 4% in the quarter and 9% over the last 12 months. In aggregate, our portfolio companies grew revenue by more than 20% over the last 12 months. The operating environment is normalizing, and our portfolio continues to demonstrate strong cost management and stable margins. TPG AG's credit appreciated by 4% in the quarter and 14% in 2023 on a pro forma basis, driven by strong credit selection and a low annualized loss ratio across the portfolio. Our strategies also benefited from the broad credit market rally heading into the end of the year. In Real Estate, the performance of our portfolio reflects the broader challenges in the sector resulting from higher rates, although the fundamentals across our underlying core sectors and assets remain strong. Looking forward, I'll reiterate the guidance that we provided at our Teach-In in November. We expect our total private equity and infrastructure capital raised in 2024 to grow compared to 2023, driven by the fundraises for growth and Rise Climate as well as the launch of our Climate Transition Infrastructure Strategy. Additionally, in 2024, we expect fundraising for TPG AG Credit to exceed $10 billion, more than doubling the capital raised by the platform in 2023 on a pro forma basis. On credit deployment, as Jon indicated, we expect a significant increase in each of our core strategies this year, which will grow our base of fee-earning AUM. Stepping back, we're excited about the progress we've made over the past two years in executing against our strategic priorities. We've scaled and diversified our business while maintaining a strong focus on delivering excellent returns for our clients. Looking forward, we're equally excited about our path ahead. We have great visibility into the next phase of our growth with multiple levers to expand our asset base and drive revenue growth and operating leverage. We're confident in our ability to continue delivering differentiated performance for our clients and long-term value for our shareholders. Now I'll turn the call back to the operator to take your questions.

We'll take our first question from Alex Blostein with Goldman Sachs.

Hi, good morning, everybody. Thank you for the question. My first question is around credit, albeit it's got two quick parts to it. So the first is, hear you on the expectations for accelerating fundraising? And I think you reiterated over the $10 billion number that you talked about previously. Can you just spend a minute on what that comprised of, in terms of the key strategies, but also how much of that growth is sort of like embedded legacy AG relationships or you're also incorporating some of the incremental cross-selling opportunities that we talked about between AG and TPG? And then on the deployment side, and that's the second question here. I was just curious, within the $132 million of sort of shadow fees, how much of that is related to credit? Thanks.

Thanks, Alex. I'll begin and we will try to uncover the last part of your question. If we can't, we will follow up with you. First, regarding capital formation, we anticipate a strong balance from existing relationships that the AG Credit team has and we are actively engaged in those discussions across the strategies. Additionally, as we've mentioned before, due to the limited overlap in the LP base between TPG and AG, there remains a significant opportunity for us to broaden capital formation with relationships that TPG is now introducing to AG. We've been dedicating considerable time, particularly after the close, with our capital formation team to expand these relationships on the Credit side, and we're seeing positive progress. I expect that by the end of the year, we will have significantly broadened and deepened AG credit relationships, which will contribute to our growth in these strategies. We are also currently in the market and, as I noted, we are working on several fundraising vehicles for TPG AG Credit, focusing on raising capital through the Wealth channel. This will be a continuous effort to expand our access and reach in that channel, creating multiple vehicles for each strategy to enhance our fundraising capabilities as we grow. Several channel partners have already commenced this process with us, so I anticipate further growth there as well, especially given the increased brand recognition of TPG AG and the established track record from our investing activities. As I mentioned, we are actively marketing all our Credit strategies and I expect to see growth in fundraising. Although it's difficult to specify how the growth will be distributed among our three credit strategy pillars, we will see growth across all of them.

And Alex, this is Jack. On your question about the $132 million of estimated annual fee opportunity from both AUM not yet earning fees and subject fee step-up, that's weighted toward the AUM not yet earning fees, as you expect. Probably $100 million of that is in that bucket and $30 million or so is in the fee step-up category. And within the AUM not yet earning fees, the biggest components would be across AG's Credit and Real Estate business; it's probably half of that, call it, $50 million of the $100 million, and the remainder kind of weighted toward TPG Growth and Real Estate platforms. And in the FAUM subject to step up, that $30 million, the biggest component of that would be in the Capital platform because you remember, we had the J-curve mitigant structure in some of our capital that steps up as we invest capital. And about $10 million is in the AG Real Estate business.

Great. Thank you both.

The next question comes from Ken Worthington with JPMorgan.

Hi, I apologize. As we think about net accrued carry, you've called out a number of times that you went through a more aggressive realization phase, prior to the IPO. But if we looked at the accrued carry today by vintage, 80% is older than five years, and it would seem like realizations should be front-end loaded. How do we think about 2024, from a realization perspective, if the market environment remains benign? And can you remind us how the European Waterfall Structure and the Angelo Gordon fund should reasonably play out over the next few years?

Do you want to comment on the realizations on the private equity side first?

Certainly. This is an area that we focus on a lot as a partner group. It’s significant for our investors and reflects our commitment to effective fund management. In the past few years, we have been investing in our companies, and we now have several strong performers positioned to generate value in the coming years. Notably, we've achieved some key successes in recent quarters. For instance, we mentioned the sale of CAA in the second half of last year, which was a successful exit after a 13-year partnership where we were strategic about timing. Recently, we also sold a significant block of shares in Nextracker, a company that went public in early 2023 and has increased about 130% since its IPO price. This illustrates our ability to be selective, particularly in Private Equity. Over the past two years, we initiated seven IPOs in India, and the holdings we still have are performing well above their initial offer prices. IPOs serve as strong indicators of market liquidity. Overall, while we’ve had notable successes, we've been selective and focused on building value in our portfolio after a significant realization phase in 2021 and 2022. Looking ahead, we are committed to enhancing liquidity for the firm. As market conditions improve, we are proactively managing private equity within each business unit, and with the upward trend in the deal market and the resilience of our portfolio companies, we anticipate more opportunities to generate liquidity this year.

Great. Thank you.

The next question comes from Michael Cyprus with Morgan Stanley.

Hi, good morning. Thanks for taking the question. Just wanted to come back to the Private Wealth opportunity. I was hoping you could maybe elaborate on the positioning now that you guys have within the Private Wealth marketplace. Maybe talk to some of the products that you have. I think you alluded to bringing some new products to the marketplace, as well. How are you thinking about that? What sort of traction are you seeing on the existing products, in the marketplace, maybe talk to some of the steps that you're looking to take here in '24? Thank you.

We've been actively engaging with several channel partners. Before the AG acquisition, it was common for us to raise capital through our Private Equity and Real Estate strategies with these partners on a campaign basis. However, the relationship dialogue has now evolved significantly. The AG acquisition has allowed us to expand our strategies and provide more continuous offerings, like BDCs. This, combined with the existing relationships AG had with various channel partners, has led to strategic discussions about a more comprehensive approach to these channels. I've personally been involved in several of these conversations recently, and there's a strong interest from Wealth channel partners for a more varied product offering from TPG. The demand for diversification in the strategies available in the Wealth channel is evident, and we are encouraged by the positive feedback from our partners. Our combined resources from the two firms have more than doubled, enhancing our team's focus on product creation, structuring, and relationship management. We're seeing distinct advancements in our channel penetration. We currently have products in the channel for our direct lending and Structured Credit businesses, as well as some private equity strategies and real estate capabilities. Our brand is strong and gaining recognition, and we're optimistic about our growth in the Wealth channels moving forward. Over the past two years, we've voiced our goal of strengthening our distribution base and enhancing our capital sourcing, and we are making progress in that direction.

Great. Thank you.

The next question comes from Craig Siegenthaler with Bank of America.

Hey, good morning, everyone. So for my question, I wanted to hit on the FRE margin target. Your 47% pro forma FRE margin already beat your 45% long-term target, although I think this was driven by catch-up fees and transaction fees. And then starting '24, Angelo Gordon initially will weigh on the margin, but this will reverse as you realize cost synergies. So as you pull all this together, isn't your 40% 2024 and 45% long-term targets too conservative? Or is this also implying a healthy level of investing?

Thank you for the question, Craig. We believe this is the right target for us at this stage. You mentioned some key drivers. The margins in the fourth quarter were boosted by catch-up fees, and we also saw strong performance in core fundraising and transaction fees. However, some of these factors may not repeat in 2024. Consider the ongoing fundraising landscape. We have just finished raising large flagship private equity funds, which naturally included elevated catch-up fees towards their conclusion. We are now entering the market with significant new flagship funds, such as those focused on Climate and Infrastructure, as well as a new growth fund, which we expect to complete by 2025. As we approach the end of these campaigns, we anticipate seeing additional catch-up fees in 2025 linked to these funds. Regarding your point about cost synergies, we noted at our Analyst Day that we have realized $9 million in cost synergies. We have consistently indicated that this transaction is primarily focused on growth and diversification, investing in our platform rather than solely on immediate cost savings. We are discovering further cost synergies beyond the initial $9 million, and our plan is to reinvest those into long-term growth. Considering all of this, we believe the margins we are targeting for this year are appropriate, and over the longer term, we are certainly planning to expand our businesses and achieve operating leverage.

Thanks, Jack.

The next question comes from Mike Brown with KBW.

Good morning. I'd like to start by discussing the insurance opportunity. It has been a few months since you closed on Angelo Gordon, and I'm curious if there are any updates on potential opportunities with strategic partners. Additionally, as you consider the broader platform and the diversification across many major product lines, is there any aspect of the Credit business that you believe should be enhanced or developed further to better support the insurance balance sheet?

Sure, it's a good question because it's something we have been focused on. The insurance opportunity can be broken down into two categories. First, we have several insurance companies that are our clients across various products. The insurance sector is a source of limited partner penetration for us, existing across all our strategies. With the enhancement of our product capabilities, we can engage in a more comprehensive dialogue with insurance companies, and we're already noticing the benefits. We have a dedicated team servicing the insurance sector, equipped with knowledge about what is crucial for these companies in their asset selection process. This area continues to grow and presents significant opportunities globally. Secondly, regarding our strategic expansion across asset classes, we have a clear opportunity for more strategic discussions with various insurance companies. Since announcing the acquisition of Angelo Gordon, these discussions have intensified. We are actively evaluating opportunities and will be selective in our approach to ensure we position ourselves strategically. As for our product lines, particularly in Credit, we are pleased with the diversity of capabilities we hold in Angelo Gordon. One of the reasons we were attracted to Angelo Gordon is its multi-strategy platform rather than a single line focus, like only direct lending. It has capabilities in direct lending, Credit Solutions, and Structured Credit. It's essential when managing assets for insurance companies to have strong product structuring capabilities, including creating rated note structures, risk tranching, and sourcing assets beyond just EBITDA risks. Our Structured Credit business, encompassing asset-based finance, specialty finance, and securitized mortgage products, has been developed over the past 15 years with the necessary infrastructure, servicing capacity, and breadth of products. We will continue to build and expand these businesses as we secure more capital, and we feel confident about our current tools and positioning.

The next question comes from Brian McKenna with Citizens JMP.

Great, thanks. So performance in Rise Climate is pretty impressive today with an IRR of 27%. It would be great just to get some color on what's really driving this outperformance? And then with the next Rise Climate and infrastructure funds coming down the pike, what are your initial base case expectations for performance for these strategies?

James, I think you're on.

Thanks for the questions and greetings from Geneva, where I'm above about the 10th city of the Rise Climate launch. So I'm well positioned to answer those questions. I'd say the outperformance last year was really being in the right place ahead of a wave. We started the decarbonization investment journey almost seven years ago. And as a result, I think we ourselves are in a position to lead the market in terms of deployment and opportunity creation. Last year, I think the value creation for the fund was up 37%, which is obviously a standout in Private Equity. But in particular, we were able to execute two very important IPOs in a market where IPOs were certainly rare. And that's because I think that the public market is ready for the next generation of climate-forward companies. So this fund has, so far, in a world where we live has happened as expected in Private Equity. It's been invested in exactly the three years that we told the market to be invested. It's in 20-plus companies well-diversified. And so far, the performance, I think, as you pointed out, has been strong. Going forward, we continue to think we're well positioned to show the market differentiated opportunities, and we should be able to continue to generate the Private Equity target returns that we've been focused on in this fund. In the Infrastructure world, I think you continue to see a fair amount of interest in decarbonization, and our position essentially expanding from Private Equity into the Infrastructure adjacency offers, I think, a significant opportunity for us. So this is a period of time that investors are looking for sector differentiation, and I think we're in a good position to continue to offer it in live climate.

And Brian, in terms of fundraising targets for the business, if that's what you're referring to, we did say publicly when the commitment was announced that we were targeting at least $10 billion, across our next Private Equity fund, TRC 2, combined with the Global South initiative. So those numbers do not include the Infrastructure business. That won't all be raised this year. It will be raised over this year and next year. And assume that those funds will be activated more toward the end of the year.

The next question comes from Luke Mason with BNP Paribas.

Yeah, thanks for taking my question. It's just on transaction fees. You talked about pipelines picking up back Q1, seasonally weaker, and you integrate AG there. So I'm just wondering how we should think about the potential growth in kind of capital markets transaction fee revenue in the coming years, if we issue more benign markets? Thank you.

Good question, Luke. If you separate that into kind of the legacy TPG businesses and the Capital Markets business we're building here, then think about adding Capital Markets fees through the integration of AG, particularly on the Credit side. What we've said historically is we think of a normal run rate for that TPG Capital Markets business, at today's level to be around $100 million. So on a quarterly basis, $55 million is high, relative to that normal run rate. Now that's going to be growing over time as we grow our businesses. And then you layer on top of that opportunities from AG, which were in the early innings of developing. So I would think of the AG contribution growing during the course of the year this year. And then the TPG side, stepping down to a below-normal level in Q1 because of the seasonally light number of deals closing in Q1. So the TPG side backloaded and the AG side also kind of feathering in during the course of the year and growing during the course of the year. So much like this year, where you saw our Capital Markets revenue line start low and grow toward the back of the year, I'd expect the same kind of pattern this year.

Great. That’s helpful. Thank you.

Yeah, thanks.

The next question comes from Bill Katz with TD Cowen.

Okay. Thank you very much for taking the question, this morning. Just want to pick up on that last question. As you think about the opportunity set for the capital markets platform within the Angelo Gordon, would Apollo be a reasonable directional view? And then how much of that assumption is embedded in the 45% long-term FRE margin target? Thank you.

Good question. I think what Apollo is doing offers a reasonable directional view for the opportunity set. We're still in the early stages of evaluating that opportunity for ourselves, so we aren't prepared to provide a target number yet. However, I would say that the long-term FRE margin of 45% only reflects a portion of that opportunity.

That’s it for me, thank you.

Thanks.

The next question comes from Brian Bedell with Deutsche Bank.

Good morning, everyone. I may have received some answers, but I would appreciate more insight regarding the timing of the $132 million deployment mentioned on Slide 18. Thank you for breaking down that amount. Could you explain how you expect it to be deployed throughout this year? Are we likely to see most of that $132 million reflected by year-end, or is it more contingent on the credit conditions within AG?

Well, I would say, as I said a few minutes ago, most of that $132 million is associated with capital not yet deployed, not the natural step-up of capital already deployed on fees, the step-up structures or funds or step-up structures. So just thinking about your question, real-time, that capital underlying the capital not yet deployed probably has just taken a kind of swag a three-year deployment pace to it on average across those funds. So if I had to take a guess, I'd say that would kind of feather in over about a three-year period.

Great. Thank you.

Thanks.

The next question comes from Adam Beatty with UBS.

Thank you and good morning. I just want to ask about performance within the Credit portfolio. I appreciate the earlier comments around I think it was either equity or firm-wide, 20% revenue growth with stable margins. But there is some concern these days around middle market credit despite the growth there. Obviously, AG Credit performance was quite good. And I know there's pretty intense monitoring and tight docks around that. So just wondering if you could share any detail about how those companies are performing, whether or not there's been equity backstops or what have you? Thanks very much.

General question on that in a second, but I just want to finish that last question that Brian asked, the 132. So I don't want to leave the impression that, that's like a one-time opportunity that comes in over a three-year period. As that capital is deployed, we're obviously raising a lot more credit capital, as we've talked about. So the $10 billion of credit capital plus that we expect to raise this year will all come in with no fees yet. And have whatever fee rate you want to assume across our Credit business, we've provided some detail there. So that $132 million of fee opportunity should be growing over time as we're realizing was embedded today.

To address the question regarding credit quality and the portfolio's status, I want to emphasize that our Credit strategies have been performing exceptionally well. Specifically, in our Direct Lending business through Twin Brook, our pipeline has seen a significant increase this year due to the transaction activity we're experiencing. We are also witnessing a positive trend in quality regarding the opportunities presented to us. Over the past year, we reported no credit losses within this business, and the portfolio's performance mirrors the overall situation in our Private Equity portfolios. Twin Brook is sector-focused, and we've observed robust performance in areas such as Business Services and Healthcare. Our underwriting process is very selective, utilizing lower average leverage due to our focus on the lower middle market and applying covenant protections across the portfolio. This strategy enables us to collaborate with sponsors when necessary. Overall, the portfolio remains strong, and we anticipate a continued positive outlook in terms of pipeline quality. In Credit Solutions, our performance exceeded expectations, with a premium of over 300 basis points compared to the indices. The strong rally in credit spreads at the year's end significantly influenced our portfolio. Consequently, we've been selling off various positions in our public credit portfolio and refocusing our efforts on private opportunities, which include structuring private credit deals and rescue finance. The market currently presents a substantial opportunity set, particularly since over $1 trillion in single B-rated or CCC-rated capital structures will come due in the coming years. Nearly half of the leveraged loan market now has less than two times interest coverage, compared to the historical average of around 20%. This situation creates highly interesting private opportunities for us to capitalize on, leveraging our sector and industry knowledge across both our Credit and Private Equity businesses for underwriting and valuation. Moreover, on the Structured Credit front, we're observing significant capital needs, particularly due to the ongoing stresses within community and regional banks. We believe we are at an early stage of this dynamic, with further deleveraging expected, leading to asset sales and credit risk transfers. This environment offers us opportunities to enhance the quality of our counterparties involved in risk transfer. It's worth noting that non-EBITDA credit has not benefited from the recent rally in corporate credit, leading us to discover numerous attractive opportunities. Recently, we acquired a $600 million portfolio of consumer secured loans from a community bank, which showcases our strong portfolio and the even better prospects ahead. This should provide you with insight into our current positioning.

Very helpful. Thank you, Jon.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Gary Stein for any additional or closing remarks.

Great. Thank you. Thank you all for joining us. If you have any follow-up questions, please feel free to circle up with the Investor Relations team. Otherwise, we look forward to talking to you again next quarter.

Thanks, everyone.

Thank you.

This concludes today's TPG's fourth quarter and full-year 2023 earnings call and webcast. You may now disconnect your line at this time. And have a wonderful day.