(Bloomberg) -- RRJ Capital, the private equity firm founded by former Goldman Sachs Group Inc. banker Richard Ong, is seeking to raise as much as $2 billion for a new fund that focuses on private credit in Asia.

The Singapore-based firm has received initial interest from North American pension funds totaling $500 million ahead of the fund launch in January, according to a fund document seen by Bloomberg News. The firm is seeking at least $1.25 billion and may raise another $750 million, capping the fund size at $2 billion, the document shows.

RRJ is joining many large asset managers such as BlackRock Inc. in expanding into the fast-growing $1.6 trillion private credit markets. While the surge in interest rates has dented investor appetite for risky investments, fundraising has held up well in private credit because those loans typically carry floating rates, allowing lenders to benefit from increases in borrowing costs. 

Read More: How Private Credit Gives Banks a Run for Their Money: QuickTake

RRJ’s new fund will mainly provide private funding to companies and entrepreneurs in Southeast Asia, India and Australia, according to the document. It can also serve as a bridge to initial public offerings or strategic sale for stronger companies with below-investment-grade ratings.

While it will be RRJ’s first pure private credit fund, the buyout firm is no stranger in this space. The firm has invested around $2 billion in private credit transactions in Southeast Asia, generating investment returns of 17.5%, the document shows. The soon-to-be-launched private credit fund has a target investment return rate of 15% to 18% and will avoid distressed situations. A representative for RRJ declined to comment.

RRJ and its affiliates manage about $15 billion of long-term capital focusing on industries including health care, financial institutions, technology and logistics, according to its website. RRJ has returned more than 93% of cash on average back to investors across its funds.

Before starting at RRJ, Ong was the founder of Hopu Fund and also spent 15 years at Goldman Sachs. Charles Ong, RRJ’s co-chairman and Richard’s brother, was previously chief investment officer and chief strategy officer at Singapore state-owned investor Temasek Holdings Pte. 

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