Managing Director, Head of Finance, Private Equity
PAG
PAG is a leading alternative investment firm focused on the Asia Pacific region with three core strategies – Credit and Markets, Private Equity and Real Assets. PAG has more than 370 investment professionals in 15 key offices globally, and over US$55bn in AUM.
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The challenge
The dynamic nature of private equity fund management operations, particularly the need to manage multiple special purpose vehicles (SPV) entities in various currencies across jurisdictions, meant PAG was managing over 500 fund-related accounts over time. This presents significant operational risks and challenges in the form of:
KYC handling burden – a significant amount of time and resources was spent on know your customer (KYC) requirements, as banks typically request regular KYC updates. This recurring process created administrative overheads and delayed account setup and maintenance.
Lengthy account opening procedures – the process of opening physical bank accounts is often time-consuming, making it challenging to meet tight execution timelines, especially during deal closings.
Fragmented cash management – managing multiple accounts across various banks and jurisdictions led to a lack of centralised visibility and control. This fragmented structure made it difficult to monitor cash positions in real‑time, increasing operational complexity.
Limited cash balances and missed yield opportunities – private equity funds typically do not maintain large cash balances across individual accounts. As a result, fragmented cash holdings limit the ability to negotiate favourable interest rates. Without aggregation, idle cash earns minimal returns, representing a missed opportunity to enhance overall yield and treasury efficiency.
The solution
Over the past 18 months, PAG embarked on an ambitious strategic initiative to centralise and streamline its cash management and banking model, significantly reducing operational risks and enhancing efficiencies.
The core components include:
A simplified account structure – PAG implemented a hybrid combination of physical and multi-entity virtual accounts for over 500 fund-related accounts. This allows PAG to open one physical account per currency for each fund, while underlying virtual accounts were opened for each special purpose vehicle. This approach simplifies the account opening processes, minimises the need for costly physical accounts and addresses dormant/inactive account management issues, reducing operational overhead and fraud risks.
Clear segregation of accounts – the use of virtual accounts enables PAG to establish clear segregation between fund-level accounts and SPV level accounts across different countries. The solution also facilitates centralised fund management and consolidates reporting, improving accuracy, compliance and operational efficiency.
Automated transaction processing through improved connectivity – seamless integration with HSBC via host‑to‑host connectivity enables straight through processing (STP) of transactions. This automation enhances control, reduces errors and mitigates operational risks associated with manual intervention.
Optimised liquidity – PAG implemented a regional interest enhancement liquidity structure linked to ESG KPIs for over 500 bank accounts across its corporate and fund accounts. This provides real-time visibility into cash positions across jurisdictions, supports strategic decision-making and optimises liquidity. Through HSBC’s Interest Enhancement Facility (IEF), PAG achieves enhanced cash returns via a tiered return structure on total relationship balances over a set threshold. Having met all pre-agreed ESG KPIs with HSBC in 2024, PAG secured an additional interest uplift of ten basis points on its balances.
FX risk management – PAG established FX transaction protocols with pre-agreed rates to mitigate FX risk for USD‑based fund investments and divestments in local currencies. By leveraging HSBC’s strength in FX liquidity, balance sheet and short-term deposit placements, PAG successfully managed over US$3bn in RMB equivalent transactions for the partial divestment of AirPower Technologies in February 2025, one of China’s largest private equity divestments ever. The process encompasses divestment, investment collection, currency conversion and disbursement to Limited Partners within a streamlined, end‑to-end banking model.
Best practice and innovation
PAG worked closely with HSBC to ensure thorough due diligence, marking the first use case of virtual accounts within the private equity sector; a space generally subject to complex legal and regulatory controls.
Key benefits
Cost savings.
Headcount savings.
Number of bank accounts reduced.
Process efficiencies.
Increased automation.
Risk mitigated.
Improved visibility.
Errors reduced.
Manual intervention reduced.
Future-proof solution.
“HSBC’s consistent global banking solutions have provided a centralised, transparent view of our funds, leading to greater operational efficiencies and a significant reduction in the time required for KYC and account opening. The intuitive nature of the solution, combined with the expert guidance of the HSBC team, has enabled us to manage our cash flow more efficiently, saving time and resources that can be invested back into growing our business,” comments Nick Yu, Managing Director, Head of Finance, Private Equity.
Kenneth Lo
Head of Institutional Sales, Global Payments Solutions, HSBC Hong Kong
Congratulations to PAG on this notable achievement. This recognition underscores their pioneering vision and commitment to redefining industry standards. By leverage solutions like virtual accounts and other innovative banking solutions, PAG has transformed traditional cumbersome practices for private equity firms with enhanced transparency and efficiency. Their strategic move demonstrates strong practices in risk mitigation, operational efficiency and cash management. HSBC remains dedicated to supporting PAG’s ongoing development.
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