Key Highlights:

• Investors reducing U.S. exposure are pivoting to Asia
• China and Hong Kong emerge as major beneficiaries
• Attractive valuations drive renewed private equity interest

HONG KONG, Nov 5 – Global private equity funds are increasingly returning to China after years of limited activity, driven by lower valuations and a strategic shift away from U.S. assets, according to top fund executives.

“Non-U.S. investors feel overallocated to dollar-denominated assets,” Jean Eric Salata, Chairman of EQT Asia, said at the Global Financial Leaders’ Investment Summit in Hong Kong.

Salata highlighted that Asia, particularly China and Hong Kong, stands to gain significantly as investors rebalance their portfolios. Over recent years, private equity activity in China slowed due to economic headwinds, regulatory tightening, and geopolitical risks.

Chris Gradel, CEO of PAG, emphasized, “China is attractive now – valuations are low, debt is inexpensive, competition is minimal, and strong companies are emerging.”

Warburg Pincus CEO Jeffrey Perlman noted, “Valuations in China had previously reset, but they are now relatively appealing, making investment opportunities increasingly interesting.”

Data from Dealogic shows that private equity-backed deals in China have reached $25 billion in 2025, already surpassing last year’s total and approaching the highest levels since 2021. Notable deals include Starbucks selling a controlling stake of its China operations to Boyu Capital, attracting bids from more than 20 global and regional funds.

The renewed interest is fueled in part by U.S.-based asset reallocations, triggered by trade tensions and strategic portfolio adjustments. According to Perlman, funds are reducing U.S. holdings by approximately 5–7%, with much of the capital expected to flow into Asia.

As private equity returns to China, investors are eyeing opportunities in sectors with strong growth potential, taking advantage of favorable valuations and reduced competition.