People familiar with the situation say PAG, an Asia-focused investment group, is looking to raise $9 billion in what would be its fourth and largest buyout fund, adding to the region’s plentiful investing dry powder.
The Hong Kong-based firm has begun fundraising, with a first close likely in mid-2022, according to the people, who did not want to be identified since the information was confidential.
PAG, which oversees $45 billion in assets, did not respond to a request for comment.
China accounts for roughly two-thirds of its private equity portfolio, and the new fundraising demonstrates strong investor interest in the country despite unprecedented regulatory crackdowns in a variety of sectors, including technology, real estate, and private tutoring.
This is the latest in a spate of fundraising efforts by Asia-focused private equity companies this year, as investors flush with cash seek greater returns amid post-pandemic economic recovery while taking advantage of historically low-interest rates.
According to Refinitiv statistics, private equity-backed deals in the Asia Pacific (including Japan) for 2021 have already surpassed the previous year’s total of $187.6 billion.
According to data source Preqin, Asian funds have a historic $654 billion in unspent cash, a 70 percent increase from the mid-year level.
Preqin’s data shows that more than 340 funds have raised $143 billion this year, topping the total amount raised in 2020 of $122 billion but falling short of the $250 billion or more raised in 2016-2018.
This year’s average fund size of $416 million is much greater than the previous five years’ average fund size of $150 million to $230 million.
Hillhouse Capital raised $18 billion to become the region’s largest fund in August, just months after KKR & Co Inc raised $15 billion in its fourth pan-Asian fund.
Two persons familiar with the subject said Hong Kong-based Baring Private Equity Asia (BPEA) has completed the first closure of a new fund with a target size of $8.5 billion, with the final size potentially increasing to $10 billion. BPEA did not respond to a request for comment.
According to reporters, other managers targeting larger funds include China’s Primavera Capital, Boyu Capital, and FountainVest Capital Partners.
PAG’s PE funds seek large-scale control, buyout, and structured minority investments in the consumer, technology, healthcare, finance, and business services industries, led by Chinese dealmaker Weijian Shan.
PAG intends to float a consolidated entity of two Chinese industrial gases portfolio firms – Yingde Gases and Shanghai Baosteel Gases – on an offshore stock exchange, most likely in Hong Kong. Their overall value is expected to be more than $10 billion, according to sources.
According to insiders, it also recently led a $2.8 billion financing round for Dalian Wanda Group’s commercial property management unit, ahead of the unit’s Hong Kong debut.
In March, it paid $325 million for a controlling stake in Indian financial services firm Edelweiss Wealth Management and finalized the acquisition of Unispace, an Australian workspace company.
PAG’s third fundraised $6 billion in 2018, and its second fund raised $3.6 billion in 2016. Earlier this year, it raised $525 million for a growth fund.
Lexmark, a printer manufacturer based in the United States, and Joyson Safety, a manufacturer of auto safety equipment, are among the companies in the portfolio.
