November 19, 2018 / 6:34 AM / 23 days ago

Investment firm PAG raises $6 billion in third Asia-focused fund

(Reuters) - Hong Kong-based investment firm PAG on Monday said it has closed its third Asia-focused buyout fund with $6 billion in committed capital, and expects to begin investing from the PAG Asia III as soon as this year.

The fund, which opened in June, is the firm’s largest to date. It raised $3.6 billion with its second Asian fund in 2016.

PAG is the latest to join a slew of global and regional investment firms that have raised or are raising record-sized funds for a region seeing a surge in deal-making.

Hillhouse Capital, an investor in China’s biggest technology firms including Tencent Holdings Ltd (0700.HK) and Baidu Inc (BIDU.O), closed its latest fund at $10.6 billion in September. That exceeded the $9.3 billion of private equity firm KKR & Co Inc’s (KKR.N) Asia-focused buyout fund closed in June 2017 to become the largest in Asia.

Private equity-backed deals so far this year total $86.5 billion in Asia-Pacific excluding Japan, up 50 percent over the same period last year and surpassing the $74.6 billion full-year record set in 2015, Refinitiv data showed.

PAG was founded in 2002 by Weijian Shan, a Chinese dealmaker previously at TPG Capital Management LP [TPG.UL] and JPMorgan Chase & Co (JPM.N). It now manages $30 billion in capital, investing in major markets in Asia with a focus on buyout deals.

The firm has struck a number of high-profile deals in the past two years, including its funding in Key Safety Systems’ $1.6 billion purchase of troubled Japanese air-bag maker Takata Corp.

Last year, it won the bid to acquire control of Hong Kong-listed Yingde Gases amid a rare public Chinese boardroom battle.

PAG also controlled China Music Corp, a music streaming business which in 2016 merged with the music business of gaming giant Tencent to form Tencent Music. The business, in which PAG made an initial $60 million investment and still holds a stake, is targeting a $25 billion valuation in a planned U.S. initial public offering.

PAG’s first pan-Asia fund, raised in 2012, achieved a 22.4 percent net internal rate of return as of March 31 this year, according to pension fund CalPERS.

Reporting by Shubham Kalia in BENGALURU and Kane Wu in HONG KONG; Editing by Chris Reese and Christopher Cushing

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