Global private equity firms are showing renewed interest in China after several years of caution, drawn by more attractive valuations and a broader investor shift away from U.S. assets, according to top fund executives speaking on Wednesday.
Jean Eric Salata, Chairman of EQT Asia, told attendees at the Global Financial Leaders’ Investment Summit in Hong Kong that many non-U.S. investors now feel overexposed to dollar assets, prompting a reallocation toward Asia — particularly Hong Kong and China. Recently appointed as EQT’s new board chairperson, Salata said this shift makes the region one of the biggest beneficiaries of the diversification trend.
Private equity investors had struggled in China in recent years amid economic uncertainty, regulatory crackdowns, and geopolitical tensions, which eroded valuations and limited exit options. But that tide may be turning. PAG co-founder and CEO Chris Gradel noted that China’s market has become increasingly appealing as valuations and debt costs remain low and competition has thinned, adding that there are many strong companies available for investment.
Jeffrey Perlman, CEO of Warburg Pincus, said that China continues to offer compelling opportunities, as valuations have now adjusted to more realistic levels. He explained that previous challenges stemmed from valuations that had not yet reset, but with current market conditions, the landscape is becoming far more attractive.
Private equity-backed deals targeting Chinese companies have already reached $25 billion this year, surpassing 2024’s total and on pace to be the highest since 2021, according to Dealogic data. Earlier this week, Starbucks announced it would sell a controlling stake in its China operations to Boyu Capital, with over 20 regional and global funds reportedly showing interest during the bidding process.
Foreign funds are also responding to a structural shift in client mandates as investors diversify away from U.S. assets — a trend that has accelerated since the start of the U.S.-China trade war. Perlman estimated that this reallocation has led to a 5% to 7% reduction in U.S. exposure, noting that much of this capital could now flow into Asia.
Source: Reuters
