PAG nears final close of second Asia realty fund at $2.25b: Report

Victoria Peak, Hong Kong. Photo by Florian Wehde on Unsplash

Hong Kong-based private equity firm PAG is set to make a final close at $2.25 billion for its Asia-focused core-plus real estate vehicle PAG Real Estate Partners II within the next two months, according to a report from PERE on Monday.

The fund, which had an initial target to raise $2 billion, was launched in May last year. It gathered almost $1 billion within three months backed by a good demand from investors.

The latest vehicle, also the firm’s biggest pan-Asia fund till date, has already deployed $650 million till now, according to the report.

The fund follows an investment strategy very similar to the previous vehicle and picks up assets in gateway cities in the region – office space, multifamily in Japan and others. However, the second fund has also added Auckland to its mandate for investments unlike the predecessor vehicle.

PAG declined to comment on an emailed query on the fund.

The predecessor fund in the series, PAG’s debut Asia core-plus fund, closed in 2016 mopping up $1.3 billion. Back then too, the fund had breached its target of $1 billion. Some of the backers of the debut fund were institutional investors including Allianz and Dutch pension fund manager PGGM.

The firm is also understood to be in the market to raise its fourth direct lending fund for the region, Asia Loan Fund IV, with a target of $1 billion. The firm is said to be sounding out limited partners (LPs) for commitments as it hits the fundraising trail.

The loan fund series is PAG’s direct lending platform and seeks to offer senior secured and mezzanine corporate and real estate financing solutions to firms in the region.

In February this year, PAG was said to have purchased Mapletree Bay Point, an office building in Hong Kong’s Kowloon East that housed both HSBC and co-working place WeWork.