Asia-focused investment firm PAG has raised 3.1 billion yuan ($432 million) in the first close of its inaugural yuan-denominated buyout fund, exceeding its target, two people with knowledge of the matter said, as it looks to deepen investments in China.
The fundraising comes amid a slowdown in China’s dealmaking, pressured by economic headwinds and geopolitical tensions that have deterred many western investors from the world’s second-largest economy.
Private equity-backed deals targeting Chinese companies totalled $8.1 billion in the first half of 2025, the lowest level for the period since 2013, preliminary data from LSEG showed.
PAG’s private equity arm, led by veteran dealmaker Shan Weijian, has secured anchor investment for the yuan fund from the government of Suzhou, a city in China’s eastern Jiangsu province, the sources said.
Other investors in the fund include a number of Chinese insurance companies, they added.
PAG is still fundraising, but first-round commitments have surpassed its initial target of 3 billion yuan, the sources said, who declined to be identified as the information is not public.
Private equity funds typically begin investing after their first close.
PAG, which manages more than $55 billion of assets with its main offices in Tokyo, Hong Kong and Singapore, declined to comment.
In April 2024, public disclosures on a Suzhou government-affiliated website showed that Suzhou Xiangcheng Fund Management Co planned to commit to a PAG fund, which has an estimate size of 3 billion yuan.
Suzhou Xiangcheng Fund Management did not answer calls seeking comment.
The government of Suzhou did not immediately respond to a faxed request for comment.
Only three China-focused private equity funds, including all currencies, have been raised so far this year, totalling a mere $140 million, Preqin data showed.
Overall fundraising has been on a sharp decline since 2021, from $129 billion in 2021 to $11 billion in 2024, the data showed.
PAG and other buyout firms that have traditionally relied on US-based investors for their Asia-focused funds have increasingly turned to domestic capital for China deals over the past three years.
Reuters
