As we begin 2026, we look at how the private equity industry is adapting to the rapid changes and shocks from the last 12 months, with more to come. Investors are seeking more flexibility and diversity in strategies to navigate this shifting landscape.
On the bright side, we’ve seen the exit environment in key markets in Asia shaping up through the public markets and strategic M&A, as well as both LP and GP-led secondaries. On the brighter side, there is a widening range of capital sources in Asia coming into play for fund managers to orient their fundraising efforts.
Lastly, we take a look at the PE exit activity rebound in Greater China in 2025 and how this year is likely to build on that momentum.
Macro context matters
The world had barely rung in the new year when festivities in Venezuela turned into fear with the US military intervention in Caracas to remove former Venezuelan leader Nicolas Maduro.
The global market reaction to the events was mixed, even as observers speculated on the US’s motives for the operation, particularly in relation to Venezuela’s significant reserves of oil and critical metals and minerals.
Natixis’ chief economist, Alicia Garcia-Herrero, said in a brief note that the event could have major ramifications in Asia. One issue involves China and its deep interests in the Latin American country’s oil, precious metals and critical raw materials industries; there are also broader geopolitical concerns for various countries in the region.
The effects of events in Venezuela on private markets are more nuanced, particularly given the already protracted period of uncertainty through which both allocators and managers have had to navigate. Further market volatility and uncertainty would affect business planning and allocations, which could in turn jeopardise exit processes and impact return timelines.
As LGT’s global head of Investment Solutions, Mika Kastenholz, noted in the firm’s outlook for the year, “cross-asset correlations, volatility patterns, and risk premia now respond more to geopolitical, policy, and flow of funds uncertainty than to traditional business-cycle indicators.”
“Asset allocation, therefore, requires even greater emphasis on scenario analysis, liquidity management, and the ability to respond quickly rather than waiting for a mean reversion to the previous equilibrium,” Kastenholz wrote.
To be sure, the biggest alternatives firms have essentially become major asset managers, with a diverse range of offerings across strategies and geographies, which in turn would help them draw the bulk of limited partner capital compared to smaller funds with more limited scope. Capital raising is only set to get tougher, and it would be the top-quartile managers who can successfully raise their next funds.
LPs are also expected to seek lower fees and more control over their investment decisions, and are likely to be drawn towards co-investments.
On the other hand, GPs are also looking at diversifying their LP relationships. The growing pool of capital ranges from some Asia-based insurers – including one in Thailand – that have adjusted their policy to increase allocations to alternatives to drive higher returns, to family offices and ultra-high net worth individuals, as well as accredited retail investors. PE advisors have pointed to firms that have set up teams dedicated to engaging with family offices.
Meanwhile, exit paths are increasingly involving secondaries and continuation vehicles, amid the clamour for liquidity. However, GPs have yet to generate sufficient distributions and liquidity from their 2020-2022 vintages that would allow them to raise new capital. This could mean lower new investment activity in the coming years.
Still, a couple of investment themes are set to dominate the year, namely energy transition and digital infrastructure, owing to their secular demand and policy support, as well as long-term inflation-indexed contracts and little correlation with traditional assets, which make them appealing to investors in the current climate.
China: Coming out of the gate
After a prolonged contraction, 2025 turned out to be a stellar year for PE in China, driven by robust exit activity that is expected to continue into this year with a strong pipeline of issuers.
As China gallops into the Year of the Horse, the reopening of IPO markets, particularly in Hong Kong, a rise in M&A opportunities, and growing market recognition of secondaries are expected to play a bigger role amid fundamental shifts in China’s private markets.
However, some of the other positive signs that emerged around the end of 2025, such as a surge in US dollar fundraising by select Chinese funds, may be short-lived. Already, Chinese IPOs in the US slowed as Nasdaq raised the bar for listings, which particularly impacted smaller Chinese listings.
Still, the year saw IPOs by 247 Chinese companies across stock exchanges globally raise $46.8 billion, representing a 26.7% increase in the number of IPOs and a 126.4% rise in the total IPO proceeds, according to data from Zero2IPO.
China also saw green shoots in liquidity with select large M&A exits, secondary stake sales, and public market sell-downs of listed positions to provide interim liquidity to LPs.
Landmark deals of PE firms exiting from their Chinese portfolios included Bain Capital’s partial exit from hyperscale data centre provider Chindata, and Tiantu Capital’s full exit from yogurt maker Yoplait China.
Mirroring a regional buyout trend, big-ticket control investments involving the carve-out of MNCs’ China operations also defined the year. Deals such as Boyu Capital’s acquisition of Starbucks China and CPE’s investment to drive Burger King’s growth in China were representative of an ongoing market trend that saw foreign companies seeking local partners to weather intensified competition and tougher operating conditions.
Other significant deals included Wanda Group’s sale of its shopping malls to a PAG-led consortium, as well as Qiming Venture Partners’s move to acquire a controlling stake in mainland-listed smart transportation company Tiamaes Technology.
And, in a sign of China’s maturing PE market, control- and buyout-oriented dealmaking is also here to stay as fund managers place a greater emphasis on operational value creation and proactive exit management.
Secondaries, too, gained more market recognition, especially among state capital funds and insurance companies seeking alternative exit routes, making it an increasingly standard liquidity management tool in China.
In the first three quarters of 2025, the number of secondary transactions in China grew by 234% year-over-year (YoY) to reach 867 deals, while their deal value increased by 182% to about $13.2 billion, according to data from Zerone.
GP-led secondaries, particularly continuation vehicles (CVs), also allowed global investors to scoop up high-quality assets in China, with the latest example being the Abu Dhabi Investment Authority’s investment in a $770-million multi-asset CV from CDH Investments.
HSG, formerly known as Sequoia Capital China, is also reportedly looking to raise a multi-asset CV that includes a portion of its stake in ByteDance, Reuters reported this week.
USD fundraising remains challenging in China, despite a select few dual-currency fundraising successes by managers like Monolith Management and Source Code Capital. The future of USD fundraising for China-focused strategies is still uncertain, notwithstanding increased investor interest in specialist funds with strengths in AI and deep tech.
Top APAC PE developments
Fundraising
Warburg Pincus has surpassed its fundraising target to secure $3 billion for its latest financial services fund. Warburg Pincus Financial Sector III, launched in 2024, is the firm’s largest dedicated financial services vehicle to date.
Seraya Partners, the Singapore-based PE firm focused on next-generation infrastructure, is understood to be nearing the first close of its second fund at around $650 million.
India’s healthcare-focused Somerset Indus Capital Partners has secured $15 million from Proparco, the private-sector arm of the Agence Française de Développement Group, for its third fund.
Samty Holdings, an accommodation developer and fund manager in Japan, has closed its new multifamily asset fund totalling $500 million. Samty’s majority owner, Hillhouse Investment Management, serves as the GP.
Deals
Bain Capital is buying a 43.66% stake in South Korea’s Echo Marketing, which owns local activewear brand Andar, from its founder and another shareholder for $150.14 million.
Carlyle Group is acquiring fast-food chain operator KFC Korea for an undisclosed amount. The deal will give Carlyle full control of the brand’s South Korean business.
One of Asia’s largest asset managers, Amova Asset Management Co, formerly known as Nikko AM, has agreed to acquire a controlling stake in Malaysia’s AHAM Asset Management.
Blackstone has agreed to acquire Hamilton Island, a flagship resort destination in Queensland’s Whitsunday Islands, from the Oatley family. The asset includes five hotels and more than 20 restaurants and bars.
People
Ares Management in Hong Kong has brought on Gabriel Fong as Partner, Asia Credit, Fong said in a social media post. Fong was formerly Head of Special Opportunities Group at CapitaLand.
South Korean prosecutors requested a warrant to arrest Kim Byung-ju, chairman of private equity firm MBK Partners, over its sale of troubled supermarket chain Homeplus, Reuters reported.
What to watch for
Exchanges across the region, particularly in Singapore, Malaysia, and Indonesia, are poised for more initial public offerings (IPOs), including those of PE-backed companies, this year.
Among the proposed IPOs are Creador-backed beverage company Loob Holdings and Ekuinas-backed tanker fleet operator Orkim Berhad in Malaysia. Indonesia is anticipating a clutch of large-cap IPOs, including those from the mining and resources sectors, while Singapore is expecting that its equities market reforms will draw more new issues rather than privatisations this year.
