PAG cuts target size of Asia fund by one third

The change was confirmed by four sources familiar with the situation.

In addition to weakening investor appetite for Asian private equity, the sources - two of which claimed to have been briefed directly by PAG - cited the firm's exposure to China as a contributing factor. Confidence in that market has been shaken in recent years by economic uncertainty, US-China geopolitical tensions, and regulatory upheavals in several sectors.

A spokesperson for PAG noted that the information is incorrect and declined to provide further comment.

As of December 2021, 52% of PAG’s invested capital in closed-ended funds – across all strategies – was deployed in the Greater China assets, according to its IPO prospectus. PAG filed for a USD 2bn Hong Kong listing in March 2022, but lukewarm sentiment on fundraising contributed to the process being put on hold, Mergermarket reported in June 2022. The IPO application has since lapsed, the bourse’s website shows.

PAG had raised USD 2.2bn from 28 LPs for Fund IV, according to a US regulatory filing published last month. These filings do not necessarily reflect the full extent of a fundraise.

Having launched the fund in late 2021, PAG expected to reach a first close by mid-2022, according to a media report in October 2021. A first close has now been pencilled in for the first half of 2023, the first two sources said.

The firm’s previous fundraises have been much swifter. Fund III closed at the hard cap of USD 6bn in November 2018 after approximately six months in the market, beating a target of USD 4.5bn. Fund II took eight months to reach a first and final close of USD 3.66bn in December 2015. PAG’s debut buyout vehicle spent seven months in the market, closing on USD 2.5bn in September 2012.

PAG’s first and second buyout funds have generated net returns of more than 2x, according to the third source. Performance data disclosed by California State Teachers’ Retirement System (CalSTRS) indicates that Funds I and II had generated IRRs of 17.72% and 17.93%, respectively, as of 30 June 2022. Fund III was on 7.1%.

As of the same date, PAG had over USD 50bn in assets under management (AUM) across three strategies: private equity, real assets, and credit, according to its website. Private equity accounted for the largest portion – 36.1% – of AUM as of year-end 2021.

PAG’s private equity team targets large-sized control, buyout and structured minority deals across Asia Pacific. Its latest acquisitions include Australia-based Patties Foods and Vesco Foods, Japanese theme park operator Huis Ten Bosch, and a 51% interest in the solvents division of Yip’s Chemical.

The firm has also emerged as a potential bidder in several ongoing deals, including Hong Kong-based broadband internet provider HKBN, Singapore-headquartered semiconductor equipment manufacturer ASMPT, and airline operator Trans Maldivian Airways, Mergermarket reported.

PAG also has an Asia growth strategy that predominantly invests in China’s middle market. Its latest vintage closed on USD 525m in 2021. Last December, the firm closed its fifth pan-Asian private credit fund at the hard cap with USD 2.6bn. It is the largest direct lending fund raised to date for deployment in Asia.

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• Topics
• Buyout
• Fundraising
• GPs
• Greater China
• Asia
• Fundraising
• PAG