Asia private capital: first-quarter data and trends

Asia's private capital markets were quiet in Q1 after a better second half in 2024.

Subdued first quarters are not unusual but there are interesting data points that might indicate an imminent uptick in the M&A and exit markets.

Our analysis below examines the quarter's data and beyond, including the potential relaunch of listed private equity funds in Hong Kong and increasing preparations for disputes over put options and private credit.

Buyout value exceeds Q1 2024 on lower deal count; industrials dominate
 

Buyout volume for Q1 2025 trended downwards, but value for the quarter finished above Q1 2024.

Geographically, Q1 2025 buyouts showed strong activity in Japan by both volume and value and was one of the few Asia countries to record higher levels of deal activity quarter on quarter. China recorded a similar deal value to Japan, albeit across a much smaller number of deals.

Q1 2025 sector activity was dominated by industrials, closely followed by healthcare. Energy, materials and consumer buyouts fell back in Q1 2025 after leading the pack in the last quarter of 2024.

The volume of exits activity was muted in Q1 2025, but deal values were higher, suggesting larger assets might be starting to shift.

 Multiples drop back in line with index earnings
 

Asia buyouts’ average EV/EBITDA multiple is tracking lower in Q1 than the first quarter of last year. While a number of factors could be at play here – including the low number of deals in the quarter – it may suggest that the pricing expectations of buyers and sellers is closing, triggering more deals as a result.

Moreover, the average EV/EBITDA multiple for Asia buyouts is also converging with major Asia indices, potentially easing the path to public market exits.

2025 will be a year for exits – and disputes

An increased desire for exits has been a constant theme in private capital in recent times. Major private equity firms are upfront about the need to get out of older vintage investments, with challenges most likely to arise for funds that were fully invested at the peak of the market between 2019 and 2021.

Premium assets will clearly be of more interest, putting even more pressure on those funds without a flagship asset to sell. The funds most likely to succeed are the mega funds and the niche funds, while mid-market funds may struggle. These tensions are likely to create disputes across multiple jurisdictions and sectors.

We know too that there is another raft of put-options disputes growing, with a race underway amongst shareholders to enforce against the same asset pools. This will require creative and early litigation strategies to avoid missing out.

Clients tell us that private credit is another area in which they expect their most complex disputes. We are working closely with our corporate colleagues to ensure that we are having conversations early to be best placed to assist when these disputes arise – as they will.

Asia fundraising environment remains challenging
 

Fundraising activity globally, and in Asia in particular, remains extremely challenging, and differentiation will be crucial for successful Q2 fundraising.

Q1 2025 figures show a drop in the number of Asian funds that have raised capital, a number below any quarterly result in the past two years.

The Asia amount raised remained largely flat quarter on quarter however, continuing the trend of capital being concentrated in a smaller number of larger funds.

Global allocations to Asia have not recovered and Asian GPs are currently chasing a lower share of global LP capital than in previous years.

Asia-focussed fundraising as a percentage of global fundraising stood at ca. 12.6%, compared to 18.7% in 2020.

Mainland China remains the most active fundraising geography, with 63% of funds launched in the quarter naming China as the preferred geography for investments. Domestic commitments within Mainland China continue to dominate, accounting for nearly half of all commitments made this quarter. Similarly, 64% of funds launched in Q1 2025 were domiciled in Mainland China, followed by India with 9%, Japan with 7%, the Cayman Islands with 6%, and India and Singapore with 5%.

Over 20% of all commitments to Asia funds were made by economic development agencies, followed by corporations (19%) and banking institutions (15%).

We are hearing from emerging Asian GPs with unique value propositions and investment opportunities that are looking to raise smaller funds. Opportunities that these GPs identified in Q1 2025 were predominantly in the healthcare sector.

In the current environment, raising blind pool funds remains challenging for new entrants, but smaller project funds may be easier to close in Q2 and Q3.

Growth ahead for listed private equity funds in Asia?
 

Interest has increased globally in listed PE funds, with the number of these evergreen structures in the market having grown almost exponentially over the last two decades.

Asia GPs are attracted to this structure to access new sources of capital and create permanent pools of capital, unrestrained by the typical term restrictions of closed-ended private equity funds.

The Hong Kong Securities and Futures Commission (SFC) published a circular in February 2025, which may mark the start of a new chapter for these funds in Asia.

The circular clarifies the SFC's requirements for the authorisation of closed-ended alternative funds seeking a listing in Hong Kong, as well as the requirements for the distribution of these funds by intermediaries.

This marks a policy shift after listed investment companies under Chapter 21 of the Listing Rules had fallen out of favour for various reasons. It offers an opportunity for Hong Kong to establish itself as the hub for listed private equity funds, a unique position in Asia.

We have been working with clients and the SFC in the run-up to the circular's publication, and can advise on all stages of fund creation and listing.

Sources: Preqin, Pitchbook, S&P CapitalIQ and Hamilton Lane

Our Asia private capital team advises funds, asset managers, pension and sovereign wealth funds, and other institutional investor clients across the lifecycle.

With expertise in seven offices across Asia, we advise on fund structuring and fundraising, through M&A, financing, consortium arrangements, asset management, and exits and disputes.

Our sector focus adds value for clients with Asia market expertise in tech, financial services, consumer, infrastructure, energy/renewables, industrials and healthcare.

Contact any of the partners below for access to the team's expertise, and click below to enrol for future briefings.

Subscribe to our Asia private capital insights