Hong Kong-based private equity firm PAG has started fundraising for a China-focused distressed debt fund with a target size of up to $300 million, IFR reported on Monday.
The new fund, called China Special Situations Fund, will add to the investments PAG has already made into distressed debt in the country, all made through its Special Situations II fund, Thomson Reuters publication IFR said, citing a person familiar with the plans.
PAG completed its second acquisition of a portfolio of non-performing loans in the space of a year in China in June, with a principal value of around $200 million and secured against property located in the eastern Zhejiang province.
PAG didn’t immediately respond to a Reuters request for comment on the distressed fund.
Non-performing loans at Chinese commercial banks reached 1.64 trillion yuan ($251 billion) at the end of June, from 1.58 trillion yuan at the end of March, data from China Banking Regulatory Commission (CBRC) showed.
But the market for troubled debt, which includes non-performing loans (NPLs) as well as loans categorised as at risk, is much larger, making it an appealing target for investors.
As well as PAG, global rivals such as KKR & Co LP and Oaktree Capital Group LLC, as well as niche firms such as Clearwater Capital Partners LLC have flocked to China’s distressed debt assets in recent years.