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Private equity firm TPG Capital takes 35% stake in CAA

October 1, 2010 |  2:28 pm

Private equity firm TPG Capital has taken a 35% stake in Creative Artists Agency, an investment in Hollywood's premier talent agency that both parties said would spur future growth.

Neither CAA nor TPG would disclose terms of the deal terms,  but the talent agency is valued at roughly $1 billion, according to agency insiders. TPG is investing an estimated $150 million in equity, with bankers contributing an additional $200 million in debt. 

As part of the agreement, CAA and TPG will create a $500-million fund to provide capital for future investments. CAA represents some of the biggest names in Hollywood, including Steven Spielberg, James Cameron, George Clooney, Tom Cruise, Will Smith, Will Ferrell, Julia Roberts and Oprah Winfrey.

CAA has been in talks with potential investors for the past seven months, Including Kohlberg Kravis & Roberts, seeking an investment partner that would bring the capital and expertise to help grow the agency's business, according to one person with knowledge of the situation.

The agency also carries the financial weight of paying the mortgage on its imposing $35-million headquarters in Century City, where it moved in January 2007 after nearly doubling in size. CAA has also been investing aggressively in the sports business.

The agency began pursuing new types of business as its mainstay -- bringing together writers, directors and actors on television and film projects -- has been under intense pressure in recent years amid changing Hollywood economics.

In 2006, it entered the sports business, and it now represents more than 650 athletes, including NBA all-stars Carmelo Anthony and LeBron James, New York Yankees shortstop Derek Jeter, Dallas Cowboys quarterback Tony Romo and soccer standouts David Beckham and Cristiano Ronaldo. CAA Sports also won the rights to sell major, multi-year corporate partnerships for the new Yankee Stadium and soon-to-be-renovated Madison Square Garden.

"CAA exists for one reason -- our clients," CAA's managing partners said in a statement. "Our new relationship with TPG will help us continue to build momentum in the work we do for our clients."

CAA's managing partners made long-term commitments to remain at the agency.

TPG invests in a number of industries, and has taken stakes in Burger King, Harrah’s, J. Crew, Neiman Marcus, Beringer Wines, America West Airlines and MGM.

"We look forward to supporting CAA at this exciting inflection point in their evolution as they look to expand their operations and services around the globe," David Bonderman, TPG founding partner, said in a statement.

 -- Dawn C. Chmielewski