UPDATE 5-TPG sells 4.5 pct stake to sovereign funds -source

* Kuwait, Singapore sovereign funds buying stake -source

* TPG informed investors in letter
(Adds quotes from investor letter)

By Megan Davies

NEW YORK, April 1 (Reuters) – Private equity firm TPG
Capital [TPG.UL] is selling a 4.5 percent stake in itself to
two sovereign wealth funds, in Singapore and Kuwait, a source
familiar with the situation said on Friday.

TPG is the latest private equity firm to turn either to the
Middle East or Asia for capital, and selling a stake will
likely raise questions about whether TPG eventually wants to
follow a handful of its rivals in going public.

The deal values TPG at $10 billion, said a separate source
familiar with the situation.

Blackstone Group (BX.N: Quote, Profile, Research) went public in 2007 after selling a
stake to a Chinese sovereign fund, Kohlberg Kravis Roberts & Co
(KKR.N: Quote, Profile, Research) listed in 2010, and Apollo Global Management (APO.N: Quote, Profile, Research)
made its debut on the New York Stock Exchange this week.

Carlyle Group may also file papers to go public later this
year, a source familiar with the matter previously said.

A source close to TPG previously told Reuters that the firm
had no plans to go public.

TPG told its investors about the stake sale in a letter
dated March 31. It said that it had “completed a private sale
of a small, passive minority economic stake” in TPG. The
letter, obtained by Reuters, did not specify who the buyers

The sovereign wealth funds investing are the Kuwait
Investment Authority, one of the largest sovereign funds in the
Gulf, and the Government of Singapore Investment Corp (GIC),
the source said. It was unclear how much each fund would buy of
the 4.5 percent of TPG that is being sold.

“The equity capital raised in this transaction will… be
used to fund the expansion of existing business lines and
general partner investments, and to help fund the growth of
firm-wide operations,” said the letter.

TPG’s letter also said it has consolidated, refinanced and
expanded its existing credit lines.

“These transactions are purely financial in nature – there
will be no change in the firm’s operations and strategy and the
investors will have no governance role whatsoever in the firm,”
the letter said.

TPG declined to comment, while representatives of the
Singapore and Kuwait funds were unavailable to comment.

The deal puts TPG’s value close to KKR’s, which has a
market capitalization of about $11 billion. Apollo had a value
of about $7 billion at the time of its IPO this week. All are
dwarfed by Blackstone, which is valued at about $20 billion.

TPG, founded in 1992 and run by founding partners David
Bonderman and James Coulter, has more than $47 billion of
capital under management. It has offices around the world,
including Singapore, according to its website.


Rivals Blackstone and Carlyle have had sovereign wealth
fund investors for several years.

Abu Dhabi bought a $1.35 billion stake in Carlyle Group in
September 2007, and sovereign wealth fund China Investment Corp
owns 10 percent of Blackstone.

CIC’s investment in Blackstone has fared poorly. It bought
in just before Blackstone went public in 2007 at $31 a share.
Blackstone’s shares are currently trading at $18.01, although
they have rallied from a low of below $4.

TPG and GIC have invested together in deals in the past. In
December, TPG and GIC bought a stake in Indonesian coal
contractor PT Delta Dunia Makmur for $331 million.

GIC, which is estimated to have a portfolio of more than
$200 billion, said in February the United States would continue
to be a prime investment destination for years to come.

Tony Tan, GIC’s deputy chairman, said recently that despite
global economic rebalancing and rapid growth in China and other
emerging economies, the United States would remain the “single
most important source of global prosperity.”

GIC’s key investments include a substantial stake in
Citigroup (C.N: Quote, Profile, Research), which it helped rescue in the aftermath of the
financial crisis. According to Reuters data, it is the biggest
shareholder in the U.S. bank with a 3.86 percent stake.

According to GIC’s last annual report, issued in September,
the United States accounts for 36 percent of its investments,
the highest of any country.
(Additional reporting by Saeed Azhar in Singapore and Eman
Goma in Kuwait; Editing by Gerald E. McCormick, Gary Hill and
Tim Dobbyn)

UPDATE 5-TPG sells 4.5 pct stake to sovereign funds -source