PAG, Carlyle hit by Asia fundraising politics.

Political Tension Affects Asian Private Equity Deals

Leading alternative asset managers, PAG and Carlyle Group Inc., are reportedly facing challenges in their bid to raise almost $9 billion each for Asian private equity deals, as the political climate between the US and China becomes increasingly tense. According to sources familiar with the matter, PAG, which is Asia’s largest multi-asset manager, has cut its target to $6 billion, while Carlyle has pushed back the closing of its new fund to April, after initially aiming to complete it last year. The sources requested anonymity, as they are not authorized to discuss fundraising.

PAG’s Decreased Target

PAG, which was founded by the former Asia head of private equity at JPMorgan Chase & Co., Tsewang “Tom” Rinzin, previously set its target at $7.5 billion, but the ongoing political tension between the US and China has led to a reduction in its fundraising goals, according to sources. While PAG has previously raised $20 billion in private equity funds since its establishment in 2002 and has a strong track record of generating profits from deals in China, it remains cautious about the current situation and is likely to reduce its exposure to Chinese assets, sources added.

Carlyle’s Delayed Closing and Lower First Close Target

Meanwhile, Carlyle had planned to raise around $7.5 billion for its fifth Asian buyout fund; however, the firm recently announced that it was aiming for a more substantial amount of $8.5 billion, as it focuses on expanding its presence in the region’s growing economy. However, as a result of the US and China’s political tensions, Carlyle has been forced to delay the closing of its fund until April and reduce its initial closing target to 35% of its $8.5 billion goal, from the usual 50%. The company, which currently manages more than $200 billion in funds across the world, has emphasized China as a crucial market for its growth plans, with deals like the acquisition of manufacturer Xuzhou Construction Machinery Group Co. in 2015, one of Carlyle’s biggest investments in the country.

The Impact of US-China Relations on Private Equity Investments

The escalating trade tensions between the US and China have led to growing concerns among private equity investors who are becoming increasingly wary of doing business in China. While the Chinese economy has historically been one of the fastest-growing and most attractive markets for alternative asset managers, investors are now worried about the potential impact of the growing political hostility between the US and China. This hostility has resulted in stricter regulatory oversight and increased competition for Chinese assets, which could ultimately affect the returns on their investments.

Moreover, the ongoing US-China trade war could also have broader implications for the global economy, which could indirectly impact the performance of the private equity market. According to analysts, the uncertainty surrounding the future of trade relations and policy decisions could lead to increased volatility on financial markets and affect investor sentiment, leading to a slowdown in fundraising activity.