Goldman Sachs is planning to raise $2 billion for its inaugural Asia Pacific-focused private equity fund, according to two insiders familiar with the bank's fundraising strategy. This move aims to increase its investment in some of the world's most rapidly growing economies. The fundraising initiative coincides with private equity firms in Asia adjusting their investment strategies and country allocations due to geopolitical tensions, higher interest rates, market volatility, and macroeconomic challenges. Goldman Sachs Asset Management, the investment division of the bank, has been promoting the new fund to sovereign wealth funds, pension funds, and private investors, with a goal to secure initial commitments by the fourth quarter, as reported by the sources. The fund, which is targeting a size not previously disclosed, will concentrate primarily on investment opportunities in Japan, with approximately half of its capital expected to be invested there. Additionally, India, South Korea, and Australia are identified as key markets for the fund, according to one of the sources. Both sources requested anonymity as they are not authorized to speak to the media. A spokesperson for Goldman Sachs declined to comment. In the first half of 2024, fundraising for Asia-focused private equity increased by 4% year-on-year to $52.7 billion, but this is still significantly lower than the average of $131.7 billion for the first half over the past decade, according to industry data provider Preqin. Global investors have been particularly cautious about investing in China due to its economic slowdown, regulatory actions, and Sino-U.S. tensions, which have negatively impacted fundraising by global private equity firms in Asia. Preqin data shows that only five China-focused private equity funds were raised in the first half of this year, totaling $2.2 billion. Conversely, Japan has emerged as a favored destination for private equity firms, with a weak yen, a buoyant public market, and policy initiatives to enhance corporate governance making its stocks and assets more appealing. Japan's benchmark Nikkei index recorded its largest absolute increase ever for the year ending March 29, after reaching record levels since February, and is up 23% this year. Private equity-backed mergers and acquisitions in Japan reached a record $35.5 billion in 2023, following a steady increase over the past decade, according to LSEG data. Stephanie Hui, Goldman's head of Asia private equity and global co-head of growth equity, mentioned in March that the firm is aiming to raise an Asia-focused fund and plans to increase investments in Japan and India. One of the sources informed Reuters that Goldman, which manages over $90 billion in global private equity assets, including buyouts and growth investments, will also continue to explore opportunities in China. The Wall Street bank's 18-member Asia private equity team, led by Hong Kong-based Hui, has invested $17 billion across 242 investments in the region, as per its website. In February, Chief Executive David Solomon announced that Goldman would raise its ninth global private equity fund this year. The bank has been involved in the private equity business for over 30 years. Since Solomon took over in 2019, the bank has been reducing its reliance on its own balance sheet in asset management by attracting external capital for investments, aiming to enhance earnings from fees. Over the past five years, the bank has invested in more than 60 companies in Asia, including Japan's Nippo Corp and Chinese software company Shenzhen Qianhai 4Paradigm Data Technology Co, according to Dealogic data. Goldman was also one of the earliest investors in China's e-commerce giant Alibaba Group in 1999, before it became the country's major online shopping marketplace.