Fundraising challenges and shifting capital allocation in APAC

After a few bumpy years, private equity in Asia Pacific shows signs of recovery.

Fundraising in the Asia-Pacific region has been dropping year on year since 2021 in terms of both the number of funds and aggregate capital raised. According to Preqin data, 2,626 funds were closed in 2021, raising $337.1B. By 2024, this had dropped to 664 funds raising $66.2B.

This mirrors a global trend: while fundraising hit a peak in 2021, with $1.16T raised by 6,916 funds, this had declined to $766.2B across 2,868 funds by 2024, the data revealed.

Moreover, APAC’s share of global fundraising dropped to 9.1% in 2024, the lowest since 2001, according to Preqin. North America dominated at 58.7%, followed by Europe at 27.2%.

While fewer funds closed and fewer hit their targets, they also spent more time in the market. Positively though, Bain & Company reported that private equity deal value in the region increased 11% in 2024, and exit values rose in every APAC country other than China. India saw double-digit growth in both deal value and deal count, the only APAC country to achieve this.

Macroeconomic factors, exit environment

The decline in fundraising can be attributed to several factors. Geopolitical tensions, economic uncertainty, and regulatory changes have made investors more cautious, particularly with regard to investing in China, although this may unlock opportunities for the wider APAC region.

The ongoing trade disputes between the United States and China have impacted investor confidence. The Biden administration’s controls on exporting advanced technologies to China had already dampened investor sentiment, which has been exacerbated by the Trump Administration’s global tariff war.

Moreover, the exit environment has been tough. This means that LPs haven’t always seen capital distributions, making it harder to justify new commitments.

Total exit value and deal count for the APAC region in 2024 stayed flat, ending a declining trend. Several countries actually saw increased exit numbers, but this was masked by a drop in Greater China’s exit value (including Hong Kong and Taiwan).

For example, India’s share of the total exit value rose 78% over 2023. Last year, the number of IPOs on the National Stock Exchange of India Limited (NSE) jumped to a record 268, a 45% increase.

Shifting capital allocations

Despite these challenges, there are several reasons to be optimistic about the future of private equity in the APAC region. The region’s robust economic growth, driven by a burgeoning middle class and rapid urbanization, presents investors with numerous investment opportunities.

Countries like India and Indonesia are witnessing significant economic expansion, drawing the attention of private equity investors. Additionally, technological advancements and digital transformation across various industries are creating new avenues for investment. Sectors like healthcare, AI, and fintech are grabbing eyeballs across the region, offering the opportunity for outsized returns.

India is emerging as a long-term private equity destination, while investors have stepped back from China as slowed growth, regulatory uncertainty, and geopolitical risks make it a less desirable investment location. Investors thought India was the emerging market presenting the best opportunities for the second year running. Although sentiment towards China improved slightly in the last year, it has dropped considerably since 2021. Southeast Asia also remains attractive.

Capital consolidation

Globally, consolidation is squeezing out smaller managers as LPs favour those with the largest AUMs. This is no different in APAC, where the number of active investors declined by 10% in 2024, from 2,694 to 2,412, according to Bain & Company. Although this decline has been in progress since 2022, which saw a record 3,510 active firms investing in the region, it brings the figures more in line with previous years. In contrast, the top 20 investors by size took home over 40% of the deal value.

Technology as a competitive differentiator

As competition intensifies for quality deals across the region, private equity firms are increasingly turning to legal intelligence and technology solutions to gain an edge. In the highly competitive Asian markets, where speed can determine access to premium deals, firms using advanced legal tech can close transactions faster than rivals relying on manual processes. This efficiency delivers a significant first-mover advantage, particularly in auction processes where timing is critical.

Beyond cost and speed benefits, these tools provide firms with a defensive edge in complex cross-border transactions. Early detection of contract anomalies, regulatory non-compliance, and potential disputes enables more informed investment decisions and sharper risk assessments. The ability to quickly identify red flags and assess legal risks across portfolios leads to more accurate valuations and better outcomes for investors.

The fragmented legal and regulatory landscape across Asia further intensifies the need for sophisticated legal technology. With different compliance requirements, corporate structures, and legal traditions spanning markets from Japan to Indonesia, firms must navigate an increasingly complex web of regulations.

Advanced legal intelligence tools help ensure accuracy and compliance when operating across these diverse jurisdictions, while automation allows firms to manage larger volumes of deals across multiple countries without proportionally scaling up their legal workforce. As the region’s private equity market shows signs of recovery, those firms that have invested in legal technology infrastructure may find themselves in a better position to capitalize on emerging opportunities.

About Robin: Robin is a legal intelligence platform that helps businesses use AI to move beyond manual legal work. Its proprietary AI models, developed in partnership with leading labs like Anthropic, revolutionize contract editing and data extraction for some of the world’s largest companies.