Developed Asia is drawing more private capital as investors seek clearer exits, stronger governance, and proven returns after several difficult years for China and parts of Southeast Asia, industry executives said at DealStreetAsia’s Asia Private Equity Leadership Summit in Hong Kong on Wednesday.
Japan is leading the shift, while Australia and Korea are also gaining attention from limited partners looking beyond growth-led Asia exposure, experts said during a panel titled “Why developed Asia is setting the pace for private capital.”
“Western capital allocation to China really slowed down or dried up for the last couple of years,” said Paul DiGiacomo, managing partner at BDA. “Japan has been the one market everyone’s been excited about, because it can absorb a large amount of capital.”
Japan’s appeal is rooted less in macro growth than in proven private equity playbooks, including corporate carve-outs, succession deals, and operational improvements, DiGiacomo said.
“It comes down to returns, and people have figured out how to make money in Japan,” he said.
The comments point to a broader reassessment of Asia’s private capital, with LPs demanding distributions and realised returns rather than relying on market growth or valuation marks.
For family offices, that shift has been reinforced by weak exit outcomes in China and Southeast Asia.
Jerry Lam, executive director at Peterson Group (Wyndham Capital), said his firm had historically been biased toward Hong Kong, China, and Southeast Asia, but had become more cautious after exits fell short of initial expectations.
“China is very tough in terms of exiting,” Lam said. “Southeast Asia, when it comes to exit, is definitely not what we would expect from day one.”
Lam said the firm has been spending more time on Japan and Australia, where M&A, trade sales, and IPO routes are more established. Access to Japan, however, remains difficult as many domestic private equity managers are oversubscribed, he added.
Bert Kwan, founder of Center Back Capital, said Asia private equity managers now face a higher bar because investors have a longer performance record to assess.
“In a lot of the Asian private equity markets, there’s now 35 years of real data,” Kwan said. “This whole notion of let’s sell the dream and raise money on the future, I think that’s gone.”
Kwan said LPs are increasingly comparing Asian funds with global peers on risk-adjusted returns, rather than allocating to the region purely for geographic exposure.
“It’s all about risk-adjusted returns,” he said.
Australia is benefiting from that reassessment because many companies, particularly in healthcare, already have sound unit economics, Kwan added. The opportunity is often to help profitable, but subscale businesses expand, including by adding labour, sites, and operating systems.
Tetsuya Tabata, head of private equity/infrastructure at Sumitomo Mitsui Trust (Hong Kong), said Japan has seen stronger interest from both international investors and domestic LPs as allocations shift from the China-heavy strategies of previous years.
“We see very strong growth compared with last year,” Tabata said, adding that momentum in Japan private equity is turning positive.
Developed Asia is also attracting capital beyond traditional buyouts, with speakers pointing to infrastructure, data centres, healthcare, energy transition, structured capital, and private credit as areas of growing interest.
DiGiacomo said Korea could see a rebound in activity after a difficult 2025, citing stronger pitch, mandate, and inquiry activity.
China, meanwhile, could eventually return to the developed Asia discussion as investors adapt to a lower-growth environment, he said.
He added: “People will figure out how to make money in China the same way they did in Japan.”
