PAG Raises $1.2B For New Asia Opportunity Fund

Hong Kong-based alternative investment manager PAG has reportedly raised $1.2 billion in fresh capital for its latest Asia Pacific real estate opportunity fund, according to market sources who spoke with Mingtiandi.

The new funding is understood to have been raised from institutional investors globally for the firm’s recently established Secured Capital Real Estate Partners VI (SCREP VI) fund.

PAG organised the new Asia-focused investment vehicle to follow up on the success of its SCREP V opportunity fund, as well as to take advantage of a tightening credit market in the region. The new fund’s hard cap, or permitted fundraising total, is $1.7 billion, with the investment manager said to be targeting a final closing by the end of the first quarter.

In response to inquiries from Mingtiandi, officials at PAG said they were not at liberty to discuss any ongoing fundraising.

Looking for Opportunities in a Tighter Credit Market

The fund is expected to invest in some of Asia’s largest real estate markets, including Japan, China, South Korea and Australia. The vehicle is understood to have already made investments in distressed situations in Japan, taking advantage of PAG’s deep roots in the country. Less than one year ago, PAG acquired a $1 billion portfolio of Japanese assets from GE real estate.

While China’s 2014-2015 real estate rebound closed the door for most global private equity investments on the mainland, recent restrictions on lending may be creating an opening for players like PAG. “A lack of liquidity in some markets is creating liquidity gaps, which in turn creates an opportunity for this fund,” a source said.

PAG, which was formerly known as Pacific Alliance Group, has invested over $30 billion in Asia since 2002. It is estimated to have $16 billion in equity under management across its private equity, real estate and absolute return strategies.

In June last year the alternative asset house held a further closing on $1.3 in funding for its PAG Real Estate Partners Fund core-plus fund – exceeding the management’s original target of $1 billion. That latest fund follows after its closing of the PAG Real Estate Partners Fund in June last year, which targets core-plus assets in the region. That fund attracted $1.3 billion in capital commitments and exceeded the $1 billion target.

PAG’s Secured Capital Real Estate Partners V fund was recently said to be projecting internal rates of return of more than 50 percent, with around 90 percent of the capital deployed.