Top private equity buyout groups have been unable to sell Chinese portfolio companies for the second year in a row, as they struggle to cash out of their earlier investments in the world’s second-largest economy.
Ten of the biggest buyout firms with investments in China including KKR, Blackstone and CVC had zero publicly disclosed complete divestments from mainland Chinese portfolio companies in 2025, according to data from providers PitchBook and Dealogic.
Private equity globally has struggled to sell its investments and reap the blockbuster gains of the past as higher interest rates depress valuations and firms face a more mature, competitive industry.
This means companies have been unable to exit their investments and generate returns for the pension funds, family offices and sovereign wealth funds whose money they manage.
“There’s huge pressure on exits globally and the China teams are under pressure to contribute to that return of capital, so there is a backlog,” said Matthew Phillips, mainland China and Hong Kong financial services leader at PwC.
The dearth of exits underlines how China remains a challenging business environment for global investors, despite efforts by Washington and Beijing to cool tensions over trade. The stalled pipeline for private equity exits also makes it difficult for investors to recycle funds into other markets.
The data from Dealogic and PitchBook covers TPG, Warburg Pincus, Carlyle Group, Bain Capital, EQT, Advent International and Apollo as well as KKR, Blackstone and CVC — 10 of the largest buyout groups. The data does not include Blackstone real estate deals.
Three private equity groups, one of them Warburg Pincus and two others that did not want to speak on the record, told the FT they had made partial sales of Chinese assets that were not made public in 2025. They did not provide the names of the companies. The other companies declined to comment.
Some private equity sales may not be public and the data from PitchBook and Dealogic excluded returns from venture capital-style deals in which funds took small stakes in companies that later launched initial public offerings in Hong Kong.
Given the struggle to return capital to their investors, private equity has been forced to come up with more innovative ways to “realise” gains on their investments including selling companies to themselves. Investors have also increasingly looked to sell their stakes in PE funds, in a process known as “secondary sales”.
“The China private equity ecosystem is still suffering from a severe liquidity gap,” said Paul Robine, chief executive of TR Capital, an investment firm that buys private equity funds and portfolios in Asia on the secondary market.
Asset valuations in China have sunk in recent years due to low demand, a weaker economy and fewer western investors, making it tough to realise gains on investments.
“Discounts of 40-50 per cent in Chinese funds have been common over the past two years in particular,” Robine noted. The average discount for secondary sales of European assets was 14 per cent, compared with 12 per cent for North America and 44 per cent for Asia as a whole, according to a report from Jefferies.
Yet simultaneously some of the world’s largest firms have also raised fresh pan-Asian funds. EQT said it expects its latest fund to invest across Asia to raise $14.5bn in 2026.
Buyout groups have been energised by opportunities in Japan, where corporate governance and regulatory reforms alongside a weak yen have made foreign investment more attractive, as well as in India.
There are some signs the market could turn this year, with investors keen to gain exposure to China’s roaring AI trade.
Bain in January completed the sale of its China data centre business Chindata at a valuation of $4bn to a consortium led by a Chinese industrial company and some local government funds, marking the first portfolio sale by one of the major global PE houses in at least two years.
The resurgence of interest in the Hong Kong stock market — about $35bn of listings in 2025 — has helped private capital groups including Sweden’s EQT, Warburg Pincus and Carlyle exit some smaller companies they took venture capital-style stakes in, rather than buyout investments.
EQT last year said it fully exited investments including in JD Industrials, while Carlyle recouped funds from the IPO of autonomous driving company WeRide. Both listed their shares on the Hong Kong stock exchange last year.
“I’m bullish on China and very bullish on Hong Kong,” EQT Asia chair Jean Eric Salata said at the Hong Kong Monetary Authority’s annual investment conference in November.
But some market participants have expressed scepticism that PE groups can ride the IPO wave in Hong Kong to sell large companies. “I do think that for buyout deals, the capital market is not the best way to exit . . . in China,” said Stephanie Hui, head of private equity in Asia for Goldman Sachs at a private equity event in Hong Kong organised by the Hong Kong Venture Capital and Private Equity Association.
“The analogy is, if you sell on the capital markets, you actually need a lot of people to agree on that pricing,” Hui said. “But if you sell into the strategic market or even to sponsors [other private equity firms], it’s kind of like art. You just need one or two people who would like that particular price,” she added.
Additional reporting by Thomas Hale in Shanghai and Kaye Wiggins in New York