The region’s star performers, namely India and Japan, were able to offset private equity dealmaking and exit performance last year, while fundraising value across Asia Pacific plummeted to new lows as investors continued to shun China, according to a report.
Private equity deal value in APAC is finally seeing green shoots of recovery after two years of decline, with an 11% year-on-year (YoY) increase to $176 billion in 2024, per Bain & Co’s Asia Pacific Private Equity Report 2025. Deal count, however, declined 9% as the recovery was askew across the region and hopes of a robust recovery were lost.
The value of Asia Pacific-focused funds raised in 2024 slumped to a 10-year low of $74 billion, down more than 20% YoY. Only 57 funds closed last year.
Fundraising was difficult as fewer funds closed and the size of closed funds fell short of targets, although the average fund size grew. The average time required to close a fund increased to 24 months, the report said.
The key hindrance to fundraising was the shortfall in exits. LPs need to see improved DPI through more exits to commit new capital. GPs also cited several reasons for the difficulty in closing funds, such as increased competition for funding; LPs’ reduced allocations to some Asia-Pacific countries, such as Greater China; and LPs’ preference for funds with a solid track record.
While heightened interest in India and Japan over the last couple of years from GPs and LPs alike boosted investor confidence, China, which has historically represented over half the region’s deal value, saw its share fall to 27% in 2024. In fact, all countries increased their value share against the previous five-year average except for Greater China.
India’s steady and fast-paced growth and Japan’s ability to deliver strong returns coupled with attractive privatisation opportunities are encouraging investors to put more money to work in the two markets, according to Prabhav Kashyap Addepalli, a partner at Bain & Co.
Going forward, major global PE funds only plan to double down in the two markets. Carlyle plans to allocate up to 35% of its $6 billion Asia-focused fund to India, and Bain Capital said it has earmarked $7 billion to invest in India over the next three to five years. Meanwhile, Ares Management and Eurazeo, among others, have become the latest fund managers to open offices in Tokyo as part of a larger Japan push.
Fund manager outlooks mirrored the unalike levels of dealmaking activity across the region. Investors in India, Japan, and Australia-New Zealand were the most optimistic about the coming year. More than 70% of GPs in India thought 2024 was a better year, as opposed to almost 60% of Greater China investors who thought last year was worse than the year before.
Buyout bonanza
As GPs opted for more control and less risk, the share of buyout deals rose above 50%. The share of buyout deals have stood at roughly 30%, according to a five-year average. Historically, the majority of funds have opted to do growth deals in APAC. But this time around, taking a controlling stake to ensure value creation for successful returns and exits took centre stage.
Macroeconomic uncertainties also pushed investors towards greater sector diversification to balance their portfolios. Technology is still the dominant sector in PE investments across the region, although its share of deals in the region shrunk to 25% in 2024 from nearly 50% earlier.
The volatility of the tech sector has driven many GPs to rethink their strategies. The scene is rapidly evolving due to the nature of the industry and regulatory complexities. Due to this shift, investment in non-technology industries, such as communications and financial services, have increased, according to the report, fuelled by multiple large deals in data centres and sizeable deals in property loan and personal loan businesses in India.
Exits remain a challenge
Exits remained roughly flat as the region’s investors ranked the exit environment as their top challenge last year, per the report. Exits amassed $106 billion in the region in 2024.
India was leading in both value and volume with $35 billion in exits. Exit value rose in most Asia-Pacific markets, with Greater China being the only exception.
Exit value plunged by around 65% YoY in China to $17 billion, while exit count decreased more than 40%. The country’s initial public offering (IPO) exit value was down 70%, while there was only one secondary sale during the year.
Secondary sales were the largest source of exits in 2024, while the IPO channel shrank significantly.
India’s IPO exit value, however, was up 78% YoY, powered by a vibrant IPO market. The market index, trading volume, and new IPO listings were all up on the country’s bourse. The public markets in India are expected to continue to be “very salient”, according to Addepalli.
“Despite some signs of recovery from a China stock market perspective, I think this overall volatility has remained a concern, just in terms of economic and regulatory uncertainties, as well as geopolitical tensions,” he said.
Due to the supply and demand mismatch that is already prevalent in the region’s secondaries market, China is doubly at a disadvantage as the risk factor associated with assets makes it harder for sellers to strike a deal with buyers.
“It’s a time to pause, reflect, and look at how things shake out from a macro, geopolitical perspective,” Addepalli added.
