PAG Capital Asia Nets $1.7B For Fund

PAG Capital Asia, a private equity fund launched by former TPG Capital executive Weijian Shan, has raised more than $1.7 billion, Reuters reported. The firm aims to close its PAG Asia I LP in a couple of months with about $2.5 billion in commitments, Reuters said. Shan is one of a slew of high-profile private equity executives who departed global firms in recent months in favor of start-up China-focused funds.

(Reuters) – Former top TPG Capital LP executive Weijian Shan has raised more than $1.7 billion under his new PAG Capital Asia private equity fund just months after the formal launch, underlining the attraction of investing in China with a known dealmaker.

Despite a tight global climate for dollar fundraising, PAG Asia I LP is expected to close with commitments of $2.5 billion in a couple of months, even though it was only formally launched in November 2010, the fund said in a release.

“Many of our investors, including sovereign wealth funds, public and corporate pension systems, and financial institutions, are very knowledgeable about Asia and have a long history of success investing in the region, both directly and through fund investments,” said Shan.

Shan’s first fund will primarily focus on investments in China but has a pan-Asia mandate.

Shan, managing partner of the fund and chairman and chief executive of PAG, is among a wave of high-profile mainland Chinese private equity executives who have quit global firms to start up China-focused funds, even as the likes of Blackstone Group LP , Kohlberg Kravis Roberts & Co and TPG have raised their own China funds.

Shan was TPG’s top China partner before leaving the buyout firm in June last year.

Mary Ma, a former top TPG executive, also left earlier this year to set up Boyu Capital and is raising about $1 billion with Sean Tong, previously a managing director with Providence Equity Partners, and Louis Cheung, outgoing chief executive of Ping An Insurance (Group) Co of China Ltd .

While fundraising, PAG Asia Capital has built a pipeline of investments, and so far this year has signed deals worth more than $700 million in retail, insurance, hotel and entertainment industries in China.

PAG is among a number of private equity firms looking to take private so-called “China orphan” companies, overseas listed Chinese companies that are undervalued by markets and whose stocks have been battered by accounting scandals.

PAG’s planned buyout of Funtalk China Holdings Ltd is one such deal.

China has attracted more than half of the $14 billion private equity investments in Asia so far this year, according to Thomson Reuters data.

While private equity investment in Asia accelerated in the first half of 2011, increasingly limited partners — the investors in private equity funds — are becoming selective about which companies they invest in because the industry faces a shrinking pool of capital globally. (Reporting by Stephen Aldred; Editing by Chris Lewis)