By Kane Wu

HONG KONG (Reuters), – Asia-focused investor firm PAG plans to raise $9B in its fourth-largest buyout fund. According to people familiar with the matter, this would increase the region’s wealth of investment powder.

Fundraising has been started by the Hong Kong-based company. The fund’s first closing is anticipated in mid-2022 according to people who declined to identify themselves because the information is confidential.

PAG manages assets worth $45 billion and declined to comment.

Two-thirds (or roughly) of the company’s PE portfolio are in China. This new financing underscores strong investor interest in China, despite the unprecedented regulatory crackdown in many sectors such as technology and private tutoring.

Fundraising is the latest of many Asia-focused private equity companies this year. This comes after investors seeking better returns in post-pandemic economic recovery and taking advantage of low interest rate.

The annual record for PE-backed Asia Pacific deals (including Japan) in 2021 is $187.6 Billion, according to Refinitiv data.

Preqin reports that Asian funds have $654 billion in untapped capital. That’s a 77% increase from mid-year.

Preqin data revealed that $143 billion has been raised by more than 340 funds this year. This is higher than 2020’s $122 billion total, but lower than the $250 billion level in 2016-2018.

Fund sizes this year are significantly larger than they were in previous five years when average levels varied between $150 million and $230 million.

Hillhouse Capital raised $18 billion in the region’s largest fund in August, a few months after KKR & Co (NYSE:) Inc raised $15 billion for its fourth pan-Asia fund, the data showed.

Hong Kong-based Baring Private Equity Asia, (BPEA), has completed the first closing of a fund with a target size $8.5billion. The final size may be raised to $10billion according to two sources. BPEA declined comment.

Reuters reported that other managers are also targeting larger funds, including China’s Primavera Capital (Boyu Capital) and FountainVest Capital Partners (FountainVest Capital Partners).

PAG’s PE funds are led by Weijian Shan (a Chinese dealmaker), and they target large-sized buyout, control and structured minority deals within the financial, consumer and technology services industries.

PAG plans to list a merged entity consisting of two Chinese portfolio companies for industrial gases – Yingde Gases (offshore) and Shanghai Baosteel Gases (offshore), most likely in Hong Kong. According to sources, their combined valuation was more than $10 billion.

It bought an Indian controlling stake in Edelweiss Wealth Management, a financial services company that provides Indian financial services. In March it also completed its purchase of Unispace, an Australian workspace company.

PAG raised $6Billion with its third fund, in 2018, and $3.6B with its second fund, in 2016, to raise $6 billion. The company also raised $525 million earlier in the year for growth funds.

U.S.-based printer maker Lexmark, and Joyson Safety, a manufacturer of auto safety products, are also part of portfolio companies.