PAG launches $750m third loan fund – exclusive

The firm’s loan fund series is back in the market with the third fund setting the same target as its predecessor.

Hong Kong-based investment manager PAG is currently fundraising for its third fund that will provide loans to Asian companies.

PAG Loan Fund III has the same target size of $750 million as its predecessor, PAG Loan Fund II. It will invest in senior, mezzanine and subordinated debt in corporates and real estate across Asia Pacific. In line with the previous two funds in its series, Fund III is expected to have a life of five years and make loans between 18 months and three years long, according to sources close to the matter.

The fund was launched in April this year, according to the sources.

PAG declined to comment on the development.

PAG Loan Fund II raised more than $800 million in 2014 with a hard cap of $900 million. Around 85 percent of the capital committed in Fund II came from investors in PAG’s first loan fund, according to PDI’s previous report.

By the time Fund II was closed, Fund I was 95 percent invested, made 17 investments and generated an internal rate of return just under 20 percent. Two-thirds of the loans in Fund I have been made to Chinese borrowers, mainly property developers using real estate as collateral.

Currently, PAG is also fundraising for its Secured Capital Real Estate Partners VI (SCREP VI), the firm’s seventh opportunistic real estate fund. The fund reached a first close on $1.2 billion in December 2016 and has a hard cap of $1.9 billion. It primarily focuses opportunistic property-related investments and distressed debt in Japan as well as selected opportunities in China, Korea, and other selected markets.

PAG, founded in 2002, is an independent alternative investment management group. The firm, previously known as Pacific Alliance Group, merged with Secured Capital Japan in March 2011.