Hong Kong-based private equity firm PAG will conclude the fundraising for its latest buyout fund at $4 billion later this month, falling short of its original target of $9 billion as investors are hesitant to invest new capital in the region, Bloomberg reported on Thursday.

Last year, PAG had reduced the target size of the vehicle—its fourth pan-Asian buyout fund (PAG Asia IV LP)—from $9 billion to $6 billion, which is the same size as the predecessor, PAG Asia III, which closed in 2018.

The firm told investors last year it anticipated raising $6 billion after the world’s biggest pension pools became increasingly reluctant to invest in illiquid assets, according to a report by Mergermarket.

Investors from the Middle East and Asia provided roughly half of the capital for the new fund, while contributions from US pensions saw a significant decline, according to Bloomberg.

The buyout firm will maintain its focus on its four key markets—Australia, China, India, and Japan—aiming to return three times the invested capital over a five-year period.

The downsizing comes amid a tough fundraising market for private equity firms. The year 2023, in particular, was a difficult one for global private equity firms looking to raise capital as tight monetary policies resulted in a liquidity crunch. Six PE funds focused on the region secured their final closes last year, of which five failed to meet their original fundraising target, according to DealStreetAsia DATA VANTAGE‘s report Private Equity in SE Asia: H2 2023 Review.

For instance, Growtheum Capital, which was seeking $600-800 million for its debut fund, closed it at $567 million in August. Growtheum Capital’s debut fund was also the biggest PE fund to close in 2023.

Meanwhile, Asia Partners failed to reach the $600 million target for its second fund, instead closing it at $474 million in December. In a similar vein, the Asia Energy Transition Fund, managed by SUSI Partners of Switzerland, closed at $120 million in June 2023, falling short of its $250 million goal.

Novo Tellus Capital was the only exception—it managed to surpass its initial target by 36%, securing $510 million for its third fund.