Leading private equity acquisition groups have found themselves unable to offload their Chinese portfolio firms for the second consecutive year, grappling with the challenge of converting their earlier financial commitments in the world’s second-largest economy into liquid assets.
A total of ten major acquisition companies with stakes in China, including KKR, Blackstone, and CVC, recorded zero publicly reported full divestitures from their mainland Chinese holdings in 2025, based on figures provided by PitchBook and Dealogic.
Globally, private equity has encountered difficulties in selling off its investments and achieving the substantial returns seen previously, as elevated interest rates suppress valuations and firms confront a more mature, competitive sector.
This situation implies that companies have been incapable of exiting their stakes and generating profits for the pension schemes, family enterprises, and sovereign wealth funds whose capital they administer.
“There’s immense pressure on exits worldwide, and the China teams are obligated to contribute to that capital repatriation, leading to a bottleneck,” remarked Matthew Phillips, mainland China and Hong Kong financial services leader at PwC.
The scarcity of exits underscores how China continues to present a demanding business landscape for international investors, notwithstanding endeavors by Washington and Beijing to ease trade-related tensions. The stalled progression for private equity exits also hinders investors from redeploying capital into alternative markets.
The statistics from Dealogic and PitchBook encompass TPG, Warburg Pincus, Carlyle Group, Bain Capital, EQT, Advent International, and Apollo, alongside KKR, Blackstone, and CVC — representing ten of the foremost acquisition syndicates. The data does not incorporate Blackstone’s real estate transactions.
Three private equity entities, one being Warburg Pincus and two others preferring not to be identified publicly, informed the FT that they had completed partial sales of Chinese assets that were not made public in 2025. They did not reveal the names of the enterprises. The other companies chose not to comment.
Certain private equity sales might not be public, and the data from PitchBook and Dealogic excluded gains from venture capital-style dealings where funds acquired minor shares in companies that subsequently launched initial public offerings in Hong Kong.
Given the struggle to return funds to their investors, private equity has been compelled to devise more inventive methods to “materialize” profits from their investments, including purchasing companies from themselves. Investors have also increasingly sought to offload their holdings in PE funds, through a process known as “secondary transactions”.
“The China private equity environment is still grappling with a severe shortage of liquidity,” stated Paul Robine, chief executive of TR Capital, an investment firm that acquires private equity funds and portfolios in Asia on the secondary market.
Asset valuations in China have plummeted in recent years due to insufficient demand, a weaker economic climate, and fewer Western investors, making it challenging to realize profits on investments.
“Discounts of 40-50 percent in Chinese funds have been prevalent over the past two years specifically,” Robine observed. The typical markdown for secondary sales of European assets stood at 14 percent, in contrast to 12 percent for North America and 44 percent for Asia as a whole, according to a report from Jefferies.
Yet, concurrently, some of the world’s largest firms have also amassed new pan-Asian funds. EQT anticipates its latest fund, intended to invest across Asia, to raise $14.5bn in 2026.
Acquisition groups have been invigorated by prospects in Japan, where corporate governance and regulatory amendments, alongside a weak yen, have rendered foreign investment more appealing, as well as in India.
There are some indications the market might shift this year, with investors eager to gain exposure to China’s burgeoning AI sector.
Bain in January finalized the sale of its China data center enterprise Chindata at a valuation of $4bn to a consortium headed by a Chinese industrial corporation and some local government funds, marking the inaugural portfolio divestment by one of the principal global PE houses in at least two years.
The resurgence of interest in the Hong Kong share market — approximately $35bn in listings in 2025 — has assisted private capital groups including Sweden’s EQT, Warburg Pincus, and Carlyle in exiting some smaller companies in which they held venture capital-style stakes, rather than outright acquisition investments.
EQT last year declared it fully exited investments including in JD Industrials, while Carlyle recovered funds from the IPO of autonomous driving company WeRide. Both listed their shares on the Hong Kong stock exchange last year.
“I’m optimistic about China and very positive on Hong Kong,” Jean Eric Salata, EQT Asia chair, stated at the Hong Kong Monetary Authority’s annual investment conference in November.
However, some market participants have voiced skepticism that PE groups can leverage the IPO surge in Hong Kong to dispose of large corporations. “I do believe that for acquisition transactions, the capital market isn’t the optimal method to exit . . . in China,” said Stephanie Hui, head of private equity in Asia for Goldman Sachs, at a private equity function in Hong Kong organized by the Hong Kong Venture Capital and Private Equity Association.
“The comparison is, if you sell on the capital markets, you genuinely require numerous individuals to concur on that valuation,” Hui explained. “But if you sell into the strategic market or even to sponsors [other private equity firms], it’s somewhat akin to art. You merely need one or two individuals who would appreciate that specific price,” she added.
Supplementary reporting by Thomas Hale in Shanghai and Kaye Wiggins in New York