PAG closes its Asian Loan Fund III at $950m – exclusive

The Hong Kong-based investment firm has garnered capital for its third Asian loan fund from 12 institutions.

PAG, a Hong Kong-based private equity firm, hit its hard cap of $950 million for its third loan fund, PAG Loan Fund III, as of May 11, a spokesperson from the firm confirmed with PDI.

The fund was officially launched in 2017, according to an SEC filing recorded on August 2, 2017. The PAG Loan Fund series is the firm’s direct lending platform.

Fund III plans to invest in corporate and real estate investment opportunities across the Asia Pacific region, via mezzanine and subordinated debt structures.

“Especially considering the uncertainty in the current global outlook, we believe this strategy offers the ability to generate strong, risk-adjusted returns,” said Chris Gradel, a founding partner of PAG and the CIO for absolute returns, in the statement today.

PAG Loan Fund III had the same target size of $750 million as its predecessor, PAG Loan Fund II. PAG Loan Fund II raised over $800 million in 2014.

PDI understands that when Fund II was closed at $832 million, Fund I was 95 percent invested, had made 17 investments and generated an IRR of around 20 percent, as per PDI reporting.

The spokesperson told PDI that the latest fund garnered the capital from a dozen institutional investors from North America, Australia, and Asia, although he could not comment on the current capital deployment rate of Fund III.

Among LPs based in North America, San Francisco Employees’ Retirement System disclosed a $50 million commitment to PAG’s third loan fund, according to PDI data.

The firm was founded in 2002 and was previously called Pacific Alliance Group. It merged with Secured Capital Japan in March 2011.