APAC private equity markets have entered a holding pattern as firms face global trade and tariff uncertainty, but sophisticated managers are uncovering opportunities for investing in high-quality assets at attractive valuations
Private equity in Asia-Pacific made a solid start to 2025, but tariff dislocation has slowed M&A activity somewhat as dealmakers assess shifting global trade dynamics before buying or selling assets.
Private equity activity by value 2020 – 2025 [YTD]
Target location: Asia Bidder location: Global Sectors: All Sectors
Private equity deal type(s): Buyout and Secondary Buyout
Explore the data
Effective July 1, 2023, the underlying Mergermarket data supporting the M&A Explorer was consolidated with Dealogic data to produce an even more complete picture of the M&A marketplace. M&A Explorer commentary published before July 1, 2023 may reference data that does not reflect this consolidation.
For more details on the criteria behind deal inclusion, click here.
Prior to the announcement of far-reaching US tariffs in April this year, PE activity across APAC showed steady year-on-year gains. Buyout deal value for 2024 came in at US$175.8 billion in 2024, the highest annual deal value since 2021 and 19 percent up on the US$141.8 billion figure for 2023.
The green shoots of recovery emerged in 2024 as the global cycle of rising inflation and interest rate hikes showed signs of peaking and dealmakers started coming to terms with the fallout from a real estate liquidity crunch in China, the region’s largest economy.
Indeed, the stabilizing real estate market in China proved a key driver of PE activity. One notable deal was the proposed US$7.1 billion privatization of Hong Kong-listed warehouse operator ESR Group by a consortium led by Starwood Capital Group, Sixth Street and SSW Partners, and which also includes Qatar Investment Authority, Warburg Pincus and ESR’s founders. Another standout transaction saw a consortium headed by Asian private markets player PAG landing an US$8.3 billion deal to acquire the shopping mall unit of China’s Dalian Wanda Group.
Deal activity in other sectors and APAC jurisdictions also increased, with KKR backing the US$2.7 billion take-private of Japanese technology company Fuji Soft and Affinity Equity Partners backing South Korean car rental business SK Rent-a-Car in a US$570 million buyout.
Momentum carries into first quarter of 2025
The positive trajectory for deal flow carried into the first three months of 2025, with Asia buyout deal value more than doubling year on year, from just US$26.8 billion in Q1 2024 to US$57.6 billion in Q1 2025.
The improving Q1 2025 buyout numbers were buoyed by a series of big-ticket deals across a mix of sectors and jurisdictions, with PE firms showing increasing confidence against the backdrop of stabilizing global interest rates and improving economic growth prospects.
Bain Capital, for example, leaned confidently into markets in Japan, backing the US$5.5 billion carve-out of supermarket group York Holdings from Japanese convenience store giant Seven & i Holdings, as well as the US$3.4 billion acquisition of Mitsubishi Tanabe Pharma, the pharmaceutical unit of Mitsubishi Chemical Group.
India also saw strong inbound PE activity in Q1 2025, with Singaporean investment platform Temasek acquiring a 10 percent stake in Indian snacks and sweets business Haldiram Snacks Food, in a deal valuing the business at around US$10 billion, and New Mountain Capital investing in a US$1.4 billion deal for Indian healthcare software company Access Healthcare.
Tariffs check deal rebound
Dealmaker expectations that positive activity in Q1 2025 would continue on an upward trajectory through the rest the year, however, have been checked following US trade tariff announcements at the beginning of April.
Tariff uncertainty has most directly impacted export-led and consumer-facing businesses, but not all sectors and jurisdictions in APAC have been affected. Vendors and dealmakers have nonetheless gone into a holding pattern to assess where various tariff negotiations will land before returning to dealmaking.
Securing deals in the face of these immediate challenges will require a thoughtful approach to deal selection and execution. During the last six months, financial market uncertainty has seen several high-profile deals in APAC fall through, and in order to succeed, managers will have to adapt and be prepared to spend more time to get deals over the line. Sellers, for example, may have to retain bigger stakes post-deal to mitigate risk for new investors, or offer more generous earn-out and deferred consideration terms.
In today’s market, standard deals are no longer commonplace, and incoming dealmakers cannot simply follow growth trends and participate in all auctions to make returns. Good assets are available at attractive valuations, but deals are more bespoke and require an innovative approach to structuring to align buyers and sellers in an uncertain market.
Looking ahead: The exit priority, and a more balanced region
Beyond navigating choppy markets to sustain capital deployment, an even bigger challenge for PE in Asia-Pacific will be to increase exit activity to realize value for LPs invested in existing funds.
Regional PE firms did improve realizations to investors in 2024, with exit deal value improving from US$33.2 billion in 2023 to US$50.9 billion. However, APAC GPs remain under pressure to land exits and unwind ageing portfolios.
According to Bain & Co, only 26 percent of buyout assets valued at US$100 million or more, and invested from funds in the vintage years from 2017 to 2019, had been successfully exited. By 2024, there were more than 200 portfolio companies in 2011-2019 vintage funds held for more than four years.
The exit backlog has had direct implications for fundraising, with APAC dealmakers unable to approach investors to back new funds until legacy portfolios have been exited, and managers have made distributions to their LPs. APAC-focused fundraising dropped by more than a fifth year on year in 2024, and dry powder stockpiles were also depleted.
As managers realize portfolios, however, APAC will present compelling opportunities to deliver strong future returns. During the last five years, the buyout space has matured, diversified and become less reliant on the powerhouse Chinese economy to drive deal activity.
Prior to the pandemic, China generated 40 percent of overall buyout deal value in Asia-Pacific. In 2024, China’s share had eased to 27 percent, as new engines of M&A activity in India and Japan emerged. China remains the single biggest market for APAC M&A, but private equity funds now have more scope to diversify deployment across the region.
The long-term growth fundamentals across the region—a growing middle class, urbanization and investment in technology, infrastructure and human capital—remain firmly in place, too. Tariff uncertainty may cause short-term disruption, but over the long term, APAC is a buyout market that PE managers and investors cannot afford to ignore.
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