Pan-Asian giant PAG launches tender offer process in test for APAC market

The process is understood to be in the early stages and could involve multiple funds, Secondaries Investor understands.

PAG, one of Asia’s most established private equity firms, is seeking ways to deliver liquidity to its LPs via the secondaries market, Secondaries Investor has learned.

The Hong Kong-headquartered firm is working on a tender offer process which allows LPs to cash out of their fund interests in a GP-led process, according to four sources familiar with the matter.

The process is being shopped around buyers at this stage with the possibility of PAG offering a tender process on multiple of its funds, one of the sources said, adding that the process is in its early stages.

Two of the sources told Secondaries Investor PAG’s $3.6 billion pan-Asia buyout fund PAG Asia Capital II has been included at this stage.

Fairview Capital Group is advising on the process, the four sources said.

PAG declined to comment. Fairview did not return a request for comment by press time.

Asia-Pacific fundraising has been on the decline as geopolitical tensions and regulatory concerns around China diminish LP appetites for the region. This dynamic is likely to mean that – like many of their global peers at present – APAC funds are likely to remain in market for longer. PAG, which has strong pedigree in China, took less than six months to raise $6.1 billion against a $6 billion target for its third flagship in 2018. By comparison, PAG Asia IV launched in October 2021 with a $9 billion target and had raised about $2.4 billion as of 21 March 2023, according to filings with the US Securities and Exchange Commission.

PAG had more than $50 billion in assets under management as of 30 June, according to its website. It ranked 109th in the PEI 300 of the biggest fundraisers in private equity this year, having amassed $6.9 billion over the preceding five years.

A number of managers globally have looked to tender offer deals to provide liquidity to their LPs due to their overallocation issues. Many of these have also included stapled components, where secondaries buyers agree to make a fresh commitment of capital to the new fund.

There have been issues around pricing in these transactions, with LPs taking a lukewarm stance to uptake in such deals in recent months. Buyers also have a limited supply of capital, which includes those investing in Asia secondaries, sources have told Secondaries Investor.

Asia and Australasia GP-led transactions made up 5 percent of such deals globally last year, remaining steady in 2021, according to a report from Campbell Lutyens. LP-led transactions in Asia and Australasia made up 4 percent of investor-led volume, marking the second year in a row the region’s share fell the most. Overall, there was $106 billion of activity in the secondaries market globally in 2022 with GP-led secondaries transactions making up 40 percent.

– Alex Lynn contributed to this report.