Under the agreement, TPG will purchase 7 billion yen ($60 million) in convertible bonds with share warrants that Tomy will issue to TPG through a third-party allocation.
TPG, which has about $30 billion of assets under management, will also acquire 10.96 percent of Tomy shares held by the investment firm T2 Fund.
In addition, it will also acquire 1.97 percent of Tomy shares held by the firm as treasury stock and another 1.13 percent of outstanding shares from the company's subsidiaries.
A TPG spokesman declined to comment on the total investment amount, but the 14.07 percent stake would be worth close to $90 million at Tuesday's closing share price of 768 yen.
"Tomy is well positioned as Japan's number two toy maker and has huge potential for further growth, especially overseas," Jun Tsusaka, head of TPG's Japanese operations, said in a statement.
"Combining both partners' strengths will allow Tomy, already one of Japan's major toy makers, to further develop into a leading global toy maker," said Kantaro Tomiyama, president of Tomy.