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PAG yuan-denominated fund exceeds initial target, sources

say

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PAG yuan fund will focus on control deals in China

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China PE deals fall to lowest first-half level since 2013

(Updates response from Suzhou government in paragraph 11)

By Kane Wu

HONG KONG, June 25 (Reuters) - Asia-focused investment

firm PAG has raised 3.1 billion yuan ($432 million) at 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

as economic headwinds and geopolitical tensions deter 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

since 2013, preliminary data from LSEG shows.

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 declined to 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

U.S.-based investors for their Asia-focused funds have

increasingly turned to domestic capital for Chinese deals over

the past three years.

In 2023, Warburg Pincus said that the Chinese city of Yixing

had agreed to invest in its first yuan-denominated fund, focused

on the healthcare sector with an estimated size of 3 billion

yuan.

As of Monday, mainland China-based investors had committed a

total of 814.4 billion yuan of capital to private equity and

venture fund managers this year, up 43% from the same period in

2024, according to local data provider ZERONE.

PAG's yuan fund will focus on mergers and acquisitions for a

controlling stake, combined with structural minority equity

investments, a disclosure on the Suzhou government-affiliated

website showed.

The fund will invest in a wide range of sectors including

consumer, technology, healthcare and financial services, it

showed.

PAG's current Chinese team, mostly based in Beijing and

Shanghai, will be responsible for both yuan and U.S.

dollar-denominated investments, said the people.

The firm closed its fourth pan-Asia dollar buyout fund in

2024 at about $4 billion, much lower than the initial $9 billion

target, said the two people.

Earlier this year, it announced final closing of a $1.25

billion significant risk transfer fund and a $4 billion real

estate fund.

PAG signed an agreement with Suzhou New District in February

2024 to establish a PAG China headquarters in the city.

Most recently, the firm led a consortium to acquire 48

shopping malls from property developer Dalian Wanda, a

disclosure by China's market regulator in May showed.

Last year, PAG also led a group of investors to acquire a

60% stake in Wanda's mall unit for $8.3 billion.