TPG cuts distressed funding

TPG is scaling back the fund it raised to invest in distressed financial companies – a move highlighting the dramatically different strategies that private equity firms are employing in response to the banking crisis.

TPG originally raised $6bn to invest in distressed financial companies but has decided to return 25 per cent of that money to investors, its investors say.

The decision is particularly striking because private equity competitors such as Carlyle are raising fresh funds for the same purpose and industry leaders – including Christopher Flowers, the private equity investor – have been promoting the idea that bargains exist in the ranks of bombed-out banks and lenders.