Hong-Kong based private equity firm PAG has raised more than $1 billion for its latest pan-Asia fund.
The fund, which will focus on real estate, held its latest closing during the last fortnight, reported PERE. The final close of the fund is expected in June, to the tune of $1.2 billion. Almost all of it has already been raised, with PAG expected to contribute $20 million from its own resources.
A spokesperson said in an email that the fund would fall under PAG Real Estate, run by Jon-Paul Toppino. He had no comment on the status of the fundraise.
The latest close is in line with PAG’s original target for the fund, set last year. It had hit $400 million first close last April.
PAG makes loans to developers that need capital to complete projects, refinance other debt or buy new land.
The firm, run by former TPG executive Shan Weijian, had raised $3.66 billion for its second Asian buyout fund in January. The company had closed its first fund at $2.5 billion in 2011, and this vehicle has returned $1.5 billion to investors, with a gross internal rate of return of around 30 per cent.
PAG, formerly known as Pacific Alliance Group, is expecting net returns of between 10-13 per cent from the latest fund. It will invest in real estate assets in nine cities across China, Japan and Australia, all markets in which it has invested before.
Among PAG’s first deals in the new fund is the purchase of several assets from GE Japan Corp., which was exiting the property market.
PAG currently has more than $15 billion in funds under management, and has dedicated funds and teams focused on each strategy. Since 2002, PAG — whose other arms include PAG Real Estate and PAG Absolute Returns — said it had invested $28 billion in markets across Asia.
The firm has projected that its fifth fund will have gross returns of more than 50 per cent IRR, much higher than the 20 per cent average expected from such real estate funds. That has attracted more investor interest in its latest fundraise.
The company employs over 300 executives, across China, Japan, Singapore, Australia, South Korea and India.