China Private Equity Interest Returns, but Exit Concerns Linger

China private equity activity is recovering, although investors remain increasingly selective and focused on exit opportunities, industry executives said during DealStreetAsia’s Asia Private Equity Leadership Summit in Hong Kong.

The China private equity recovery follows a prolonged market reset triggered by the US-China trade war, the pandemic and domestic policy changes.

Gary Chan of Sun Hung Kai & Co said fundraising activity had improved during the past 12 to 18 months, although capital allocation remains highly selective.

Kent Chen of Neuberger Berman said investors are again finding opportunities in sectors including advanced manufacturing, artificial intelligence, robotics and the green economy after valuations adjusted lower.

However, liquidity remains a major concern. Hong Kong’s IPO backlog is estimated at between 480 and 500 deals, limiting exit opportunities for private equity managers and investors.

Jacqueline Zhang of HOPU Investments said China’s manufacturing scale, supply-chain depth and innovation capacity continue to make the market attractive for long-term capital despite current challenges.

The discussions highlight cautious but improving sentiment across China’s private capital markets.