👉 Background: TPG started out in 1986 as a humble tech reseller called Total Peripherals Group. Over the next 20 yars, it grew into a major player in the Australian broadband and mobile market. In 2020, TPG merged with Vodafone Australia in a $15 billion deal to become 'TPG Telecom' and take on Telstra and Optus.

‍👉 What happened: TPG Telecom is now returning up to $3 billion of capital to existing shareholders after selling off a big slice of its infrastructure business to Vocus Group. But as part of this sale, minority investors are being offered the option to reinvest up to $688 million back into TPG Telecom.

‍👉 What else: This is essentially a “de facto” capital raise, where minority investors can choose to receive their return in either cash or new shares. And if minority shareholders accept the new shares, TPG’s free float would increase from 23% to 30%. The goal is to add more liquidity to its stock and add more investors to its share register.

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‍What's the key learning?

‍💡The free float of a company is the portion of a company’s shares that are publicly available to buy and sell on a stock exchange. When most of a company’s shares are tied up by just a few big investors, it can be tricky for new investors to get in.

💡In TPG’s case, its four biggest shareholders own roughly 77% of the share register. And with a low free float, it can make a stock illiquid - meaning it’s harder to buy or sell large amounts without affecting the price.

💡By increasing the free float, TPG is hoping it will be able to reduce concentration of shares and improve liquidity, while making it easier for new investors (like super funds) to jump onboard.