PAG has announced the final closing of its third significant risk transfer (SRT) fund, with $1.25bn (£0.97bn) in total capital commitments, including co-investment capital.

The PAG BRS Fund III saw significant demand from a diverse group of institutional investors globally with commitments from sovereign wealth, pension funds and endowments across North America, Europe, Middle East and Asia Pacific, PAG said.

The alternative investment manager has been investing in SRT since 2016 and currently manages more than $4bn in SRT investments.

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“We are grateful to our investors for their trust and support in this capital raising,” said James Parsons, partner at PAG and head of the firm’s SRT investment strategy.

“The SRT market is experiencing significant growth as more banks are utilising SRT as a tool to manage the regulatory capital requirements of their balance sheet.

“We expect the SRT market to grow at a rate of 30 to 40 per cent per annum in coming years as more banks adopt SRT and additional jurisdictions provide approval for SRT transactions.”

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PAG manages more than $55bn in capital across private equity, real assets and credit and markets businesses for a globally diversified base of 300 institutional investors.

Its SRT strategy aims to invest in high-quality performing loan portfolios at attractive risk-adjusted spreads, providing investors access to stable cash flows with uncorrelated returns.

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