Hong Kong-based investment manager PAG has raised more than $800 million for a second fund that will provide loans to Asian companies.
Asia Loan Fund II will be capped at $900 million, Chris Gradel, PAG’s chief investment officer, told Bloomberg.
Around 85 percent of the capital committed has come from investors in PAG’s first loan fund, he said.
Asia Loan Fund I is 95 percent invested, made 17 investments and generated an internal rate of return just under 20 percent, Gradel added. Two-thirds of the loans have been made to Chinese borrowers, mainly property developers using real estate as collateral.
Both funds have a life of five years and make loans between 18 months and 3 years long.
PAG also plans to begin talks with investors in the third quarter about raising commitments for a second special situations fund, to invest in distressed loans. The $1 billion Pacific Alliance Asia Special Situations Fund is close to the end of its three year investment period, having launched in 2011. It has made returns in the high twenties and invested 1.5 times its capital by reinvesting it, Gradel said.
PAG bought a €700 million Japanese commercial property portfolio from Commerzbank this month. The group has more than $10 billion in capital under management across private equity, real estate and absolute returns.
PAG was not available for comment at time of going to press.