PAG aims to attract domestic and international investors with new China-focused funds, raising CN¥3bn
PAG is launching a China fund to attract domestic capital and considering another fund to meet demand from investors outside North America, reports BNN Bloomberg.
Asia’s largest alternative asset manager has raised about CN¥3bn ($413m) for its first yuan-denominated fund with contributions from local governments and affiliates in Jiangsu province, according to sources familiar with the matter.
Additionally, PAG is considering raising up to $1bn for a separate fund aimed at non-North American investors seeking specific exposure to China.
PAG remains optimistic about China’s prospects despite a trend of global buyout firms reducing their investments in the region. Major US and Canadian pension funds are scaling back, and firms like TPG, Carlyle, and KKR & Co. have shifted focus to Japan, India, Australia, and South Korea.
A spokesperson for PAG declined to comment on the developments. In a faxed response, the finance department of Jiangsu provincial government stated that it had not invested in PAG’s fund and was unaware if city- and county-level governments had participated.
PAG may utilize the Qualified Foreign Limited Partnership pilot program for the China-focused dollar fund, allowing foreign capital to invest in China-domiciled funds. This consideration arises from the interest of global investors outside North America.
The potential fund size could range from a few hundred million dollars to $1bn, though final decisions are still pending, and plans could change.
This fund would address the increasing interest from Middle Eastern and Asia-based investors looking to boost investments in China, where some asset values are seen as stabilizing.
Yuan-denominated funds allow private equity firms to tap local capital sources, such as financial institutions and high-net-worth individuals. Last year, Warburg Pincus launched a CN¥3bn fund, while Coller Capital is raising CN¥1.5bn, expecting more Chinese fund exits.
Separately, PAG plans to close fundraising for its latest buyout fund at $4bn this month, achieving less than half of its original target as investors hesitate to commit new funds to the region, according to sources familiar with the matter.
Other major firms are also reducing their exposure to China. For the first time in at least a decade, Temasek Holdings Pte’s investments in China are now smaller than those in the Americas.