According to British media reports, the top ten acquisitive private equity firms globally in 2025 have once again failed to sell their investments in China to cash out for the second consecutive year. Insider sources indicate that the valuation of Chinese assets has significantly decreased in recent years, making it difficult to liquidate, highlighting the ongoing increase in liquidity pressure in the Chinese private equity market.
The Financial Times of the UK reported on Monday, February 23, that due to weak demand, a sluggish economy in China, and a decreasing number of Western investors, the top ten global private equity firms have not disclosed any records of selling their Chinese investment portfolios for the second year in a row.
According to data providers PitchBook and Dealogic, among the top ten global private equity firms with investments in China in 2025, none completed a “publicly disclosed complete exit from a mainland China investment portfolio company.”
The report mentioned that high-interest rates have depressed asset valuations, and the industry has entered a more mature and fiercely competitive stage. This means that private equity firms find it challenging to exit investments, thereby unable to generate returns for the pension funds, family offices, and sovereign wealth funds they manage.
The top ten private equity companies in terms of investment scale in China are Blackstone, KKR, CVC, TPG, Warburg Pincus, Carlyle Group, Bain Capital, EQT, Advent International, and Apollo.
The inability to exit investments in China underscores the continued challenging business environment in China for global investors. Despite efforts by Washington and Beijing to ease trade tensions, the lack of private equity exit channels makes it difficult for investors to redirect funds to other markets.
As it becomes challenging to return funds to investors, private equity firms are forced to explore more “innovative” ways to monetize, including selling companies to another fund owned by the same firm. Investors are also increasingly selling their stakes in private equity funds on the secondary market, known as “secondary sales.”
Paul Robine, CEO of investment company TR Capital, specializing in acquiring private equity funds and portfolios in the Asian secondary market, stated that “China’s private equity ecosystem is still facing a serious liquidity shortage.”
Due to insufficient demand, a weak economy, and a decrease in Western investors in recent years, Chinese asset valuations have significantly plummeted, making liquidation extremely difficult.
Robine pointed out that over the past two years, the average discount rate for Chinese private equity fund equity has been as high as 40%-50%, while the discount rate for European assets in the secondary market is only 14%, and for North American assets, it is 12%.
For private equity investment firms, they rely on selling equity stakes in companies or facilitating companies to go public to earn returns, to provide dividends for their pension funds, insurance companies, and other funding institutions. Typically, these exit operations are completed within three to five years after acquiring a company. If it’s challenging to sell or list the invested enterprises, it means that the funds of these investment institutions are locked, and there is uncertainty about future returns.