PAG targets $4.5b for third Asian fund

The step up in fund size on the previous vintage is meaningful but not outlandish compared to some of the firm’s regional peers. Having initially sought $3 billion for Fund II, PAG took about eight months to complete a first and final close of $3.66 billion. A hard cap has not yet been set for Fund III, according to sources familiar with the situation. PAG declined to comment on fundraising activity.

Baring Private Equity Asia is already in the market, seeking $5.5 billion for its latest fund, up from $3.98 billion last time around. The Carlyle Group, which raised $3.9 billion for its fourth Asia buyout fund, has set a hard cap of $6.5 billion for its fifth. At the start of the year, Affinity Equity Partners closed its fifth regional vehicle at $6 billion, moving up from $3.8 billion.

Meanwhile, Hillhouse Capital is expected to secure at least $8 billion for its latest PE vehicle, with some reports claiming it could surpass the $9.3 billion KKR raised last year, a record for an Asian fund.

PAG’s private equity team, which is led by Weijian Shan, formerly of TPG Capital, focuses on large-scale buyouts, control deals, and structured minority investments. The firm was recently confirmed as a participant in the $1.59 billion acquisition of assets held by bankrupt Japanese auto safety equipment manufacturer Takata Corporation led by Chinese-owned Key Safety Systems.

The landmark transaction from 2017 was arguably the $2.7 billion buyout of Yingde Gases, a Hong Kong-listed industrial gas supplier that had been brought to a standstill by a dispute between the founders. PAG completed due diligence, secured undertakings to 42% of the shares, secured bridge financing, and launched a general offer for the company just as the auction process was beginning.

In addition to targeting traditional businesses, PAG has made several commitments in the internet and technology space. It nearly passed on China Music Corporation (CMC) because the check size was too small before concluding that the growth opportunity couldn’t be ignored. Tencent Holdings bought a majority stake in the company in 2016 at a higher valuation and an IPO is expected this year.

The private equity firm followed up with the acquisition of Chinese online matchmaking and dating service provider Zhenai and an investment in credit-checking specialist Dashu Finance. It also backed two companies – European dairy and ice cream producer Food Union Group and Czech consumer loans company Home Credit Group – with a view to supporting expansion in China.

PAG Asia Capital is the PE unit of PAG, one of Asia’s largest independent alternative asset firms with more than $20 billion in capital under management. It covers absolute returns and real estate as well as private equity. The Blackstone Group’s Strategic Capital Holdings Fund recently acquired a minority interest in PAG for an undisclosed sum.

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• Topics
• Fundraising
• Buyout
• GPs
• Asia
• PAG