In this edition, we examine the bullish investor sentiment towards China after a long gap marked by geopolitical and macroeconomic uncertainties and early revival trends in private equity exits in Asia.
Investors turn bullish on China’s private markets
Regional and global private markets investors have shown a complete turnaround in their opinion of China after a prolonged period of caution towards its slowing economy. Bullishness is seen returning to the world’s second-biggest economy amid a confluence of positive geopolitical, technological, and public market signals, but uncertainty remains in actual capital deployment.
The thawing of trade tensions between Washington and Beijing that saw US President Donald Trump and China’s President Xi Jinping agree to a one-year trade truce at their Oct 30 meeting in Busan, South Korea, brought a temporary relief to businesses and investors.
Improved valuation and liquidity across China’s public markets, alongside a thriving scene of initial public offering (IPOs), boost a steady recovery on mainland Chinese exchanges, while setting Hong Kong on a path to reclaiming the top spot in global IPO market rankings by the end of 2025.
Should this public market momentum continue, investor confidence in the private markets is expected to return as soon as over the next few quarters and contribute to a better exit – and hence – better fundraising environment, say investors at Hamilton Lane.
As the vibrant IPO market helps unleash liquidity, Beijing’s continued drive for technological self-sufficiency and strengths in promoting the rapid adoption of artificial intelligence (AI) offer great tech investment opportunities to the likes of EQT Asia, Hillhouse Investment, and Primavera Capital, their top executives shared at the recent Global Financial Leaders’ Investment Summit in Hong Kong.
Global investors are rethinking China in the midst of its maturing PE market, which features an expanding pool of attractively priced, small- to large-sized buyout opportunities and increasing sophistication among general partners (GPs) from the country.
“The market has matured enough to support real buyout opportunities,” a limited partner (LP) told DealStreetAsia, requesting anonymity. “Personally, this is the first time since I started working in private equity that I’ve seen a genuine emergence of buyout activity in China, which previously didn’t exist.”
While the recent high-profile, fat-cheque buyouts, including Starbucks China’s $4-billion sale to Boyu Capital and CPE’s investment in Burger King’s China expansion, made headlines, investors have set sights on the potentially more lucrative small- to mid-cap segment.
Buyouts in this transaction range tend to offer better pricing and more room for post-deal value creation, allowing investors to choose from a variety of industries beyond just food & beverage.
The retreat of many foreign investors from China at the peak of geopolitical conflicts, alongside ongoing consolidation in the Chinese PE market since the pandemic, also makes the country a less competitive market compared to other emerging buyout destinations across Asia.
But still, while investors’ interest has returned and a portfolio reallocation is expected to be underway, uncertainty remains due to China’s shifting private markets landscape.
For one, and prominently, US dollar funds are now essentially immaterial in China after the past years of geopolitical decoupling. Compared to the early 2000s, when US capital dominated, it now accounts for only a tiny fraction of China’s PE market.
A November report by Chinese market researcher Zero2IPO Research shows that RMB financing accounted for 94.8% of the total equity financing, while RMB-denominated deals represented 91.1% of the market’s total in the first three quarters of 2025.
Exit activity signals structural revival in Asian PE
Private equity exits in Asia are showing signs of recovery in 2025, led by Japan and India, with Greater China’s IPO market also bouncing back. Industry observers note that this improvement reflects a broader structural trend, highlighting the increasing maturity and sophistication of GPs across the region.
However, the improvement appears concentrated in specific regions and sectors. While Korea is experiencing a slower year, liquidity in Southeast Asia remains challenging. India and Japan are driving most of the growth, with selective exits in China and a few CVs in Korea.
Japan and India show distinct exit dynamics. Japan has seen a wider variety of exits, including M&A, secondaries, and IPOs, while India remains more IPO-driven, even for control positions. Traditionally, exits occurred via M&A or trade sales for buyouts, and IPOs for growth equity and venture capital.
Around five or six years ago, liquidity in Asian markets lagged that of their developed market counterparts. Over time, however, this gap has narrowed considerably. (see graph)
IPOs, while still relevant, account for a smaller share of overall activity, reflecting a shift toward strategic or sponsor-to-sponsor sales over public listings.
LPs generally prefer non-IPO exits such as trade sales, secondary transactions, or M&A because they are considered more reliable. IPOs remain cyclical, involve longer lock-ups, and carry regulatory and operational uncertainties that vary by country.
Furthermore, all Asian markets, including Hong Kong, mainland China, and India, have followed IPO cycles over the past 20 years, with windows opening for two years, closing for two, and reopening.
Looking ahead to 2026, one area to monitor is the development of additional exit routes in India, which would reduce reliance on IPOs. Strategic M&A interest remains limited, as buyers generally prefer buyouts over minority stakes. Another potential factor is whether warming India-China relations would encourage Chinese companies to return to investing in India.
Secondary market transactions and continuation vehicles, though not yet a dominant exit route, are also contributing to liquidity, although their share remains somewhat limited. Historically, secondaries have been portfolio management tools, helping both GPs and LPs manage tail-end funds or balance exposures.
During periods when traditional exit routes are constrained, secondaries can serve as special situations strategies for achieving liquidity. Several sponsor transactions have already occurred in India this year, though emerging markets need time to develop the infrastructure and experience seen in developed markets.
Even before COVID, China’s buyout opportunities were not expected to dominate, highlighting the room for growth in both India and China.
How does this structural evolution affect the LP’s willingness to commit capital? Ultimately, LPs aim to achieve returns above public market benchmarks within the agreed fund life. While secondaries can provide short-term relief on DPI, long-term confidence depends on GPs’ ability to deliver sustained value and maintain strong TVPI — the foundation of private market investing.
Asia’s private equity markets may be stabilising, but exit channels appear uneven. As trade sales, sponsor deals, and secondary transactions grow, they could pave the way for a stronger exit pipeline for investors.
Top PE developments
Deals
Shareholders of The Farrer Park Company, operator of one of Singapore’s largest private tertiary hospitals, are exploring the sale of their stakes in the company.
KKR is selling Singapore’s Goodpack back to its founding Lam family, more than a decade after the PE major took the firm private from SGX in 2014.
Fundraising
KKR is giving LPs back about $350 million in carried interest following the weak performance of its second Asia PE fund. The firm raised $3 billion so far for its third infrastructure fund for Asia so far in the third quarter.
In the same fiscal period, Brookfield’s latest Asia real estate collected $560 million. Separately, the manager raised $5 billion from Brookfield Wealth Solutions, including an SMA agreement with a leading Japanese insurer, marking its entry into the country’s insurance market.
People
Pantheon has built a team of three in the city-state to deepen its private wealth coverage in Southeast Asia, as part of the firm’s broader Asia-Pacific expansion plans.
Ontario Teachers’ Pension Plan (OTPP) is set to transition oversight of its Asia real estate investments to its Toronto headquarters by the end of 2026, according to a report in PERE. “This decision impacts a small number of our colleagues who will either relocate to Toronto or leave the organisation in phases,” the report added, quoting an OTPP spokesperson. This follows earlier, similar developments at OTTP’s venture capital and growth equity team in Hong Kong, and at the Ontario Municipal Employees Retirement System’s Asia buyout team.
Interviews
As India’s homegrown private equity (PE) giant ChrysCapital prepares to deploy capital from its record-breaking $2.2 billion Fund X, partner Gaurav Ahuja reflects on how the firm has evolved from a modest $64 million fund since its inception in 1999.
Private equity deal value in Japan is expected to hit a record in 2025, with the secondaries market gaining momentum as investors seek liquidity and capital recycling, according to Bee Alternatives.
The LP View
Asia’s LP-led secondary market is entering a more sophisticated phase this year. Although pricing still varies by portfolio, bid-ask spreads for strong Indian and select Asian assets are narrowing, indicating a clear shift towards quality, said experts tracking the sector.
