PAG to raise $500m China growth fund

Most of the capital is expected to come from the private equity firm’s existing LP base, although there will be a renminbi-denominated tranche raised from local investors, according to sources familiar with the situation. A first close is scheduled for next month.

Kevin Xu, an executive director who focuses on technology, media and telecom and consumer sector investments, will play a prominent role in the fund. He has been with PAG for six years, having previously worked at Apax Partners and TPG Capital.

PAG’s private equity business is led by Weijian Shan, who was formerly a senior partner with TPG in Asia. He joined PAG in 2010 and the firm closed its debut PE fund at $2.5 billion two years later. A second vehicle achieved a first and final close of $3.66 billion in late 2015.

PAG is not the only large-cap private equity firm to raise a dedicated vehicle for the mid-market space. CDH Investments, which is a China-only rather than a pan-regional player, closed its first mid-market fund at $800 million earlier this year. The vehicle comprises two pools of capital, with approximately $300 million in US dollars and the equivalent of $500 million in renminbi.

CDH raised $2.55 billion for its fifth US dollar-denominated fund in 2014 and its most recent renminbi fund closed at $1.2 billion. With an average of about $800 million to deploy per year, the private equity firm said it is obliged to consider investments in the $100 million range.

Although buyouts are becoming more prevalent in China, growth investments still dominate. According to AVCJ Research, among deals worth more than $20 million, the annual average number of buyouts in 2013-2016 was approximately 20. This compares to 130 for growth transactions. In the $200 million and above bracket, the average number of buyouts is around 10, half the average for minority growth deals.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Fundraising
• Growth
• GPs
• Renminbi fund
• PAG
• China