Investment firm PAG raises $432 million in first yuan-denominated buyout fund, sources say

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.