DealStreetAsia earlier reported that PAG Special Situations Fund III seeks to raise at least $1 billion to make realty investments in markets including Australia, New Zealand, China, Japan, Southeast Asia, and South Korea.
The firm had closed its second special situations fund at $1.4 billion in 2014.
PAG Special Situations Fund III will target an annual net return of 15 per cent. It has an investment period of three years and will begin liquidation by the sixth year. Its predecessor, PAG Special Situations Fund II, had generated a net internal rate of return (IRR) of 17.6 per cent.
According to a SFERS board meeting report, the $25-million investment was closed last month and classified as a distressed/special situations investment within its private credit portfolio.
The investment is also SFERS’s second commitment to PAG Special Situations Fund III. In July, the US pension fund approved a $50-million investment in the fund. Besides SFERS, the vehicle has also received a $75-million commitment from Texas Permanent School Fund.
The pension fund had also committed $50 million to the PE firm’s third Asia-focused buyout fund that was closed last November 2018 at $6 billion, exceeding its initial target of $4.5 billion.
The commitment to PAG’s third special situations fund marks SFERS’s latest contribution into an Asia-focused fund. It also committed $75 million to Hong Kong-based alternative asset management firm SSG Capital Management’s latest closed-end fund, SSG Secured Lending Opportunities III.
PAG is an Asia-focused investor that manages $30 billion in capital across private equity, real estate, and absolute return strategies. It operates in multiple markets including Australia, China, India, Japan, South Korea, and Southeast Asia.
SFERS, meanwhile, disclosed that its returns for the year ending June was at 2.41 per cent, topping its median peer return of 1.34 per cent. Its Private Equity portfolio recorded a gain of 6.04 per cent, boosted by its tilt toward the US, China, technology, healthcare, and its strong manager selection.
In August, the pension fund’s investment gained 3.86 per cent, with returns led by its public and private equity portfolios, which posted 6.20 per cent and 7.38 per cent returns, respectively.