The world's largest private equity managers have been unable to buy or sell corporations in China this year. Ten marquee private equity firms such as Blackstone and KKR made not a single new disclosed investment in mainland Chinese corporations between January and July this year.
According to Dealogic and PitchBook, as of the 19th (local time), new investments in China by the 10 largest private equity managers stood at zero from January through July this year. The firms were Blackstone, KKR, Carlyle, Warburg Pincus, TPG, EQT, Bain Capital, Advent International, Apollo, and CVC, 10 in total. The survey counted only disclosed new direct equity investments that the 10 large managers executed in mainland Chinese corporations. It did not consider undisclosed minority stakes, loans, real estate transactions, or follow-on acquisitions of corporations already held.
Five years ago, in 2021, they executed 12 deals, including early-stage investments. Since then, new equity investments in China plunged to two in 2024 and three in 2025. The Financial Times (FT) said foreign private equity has found it harder to access the fastest-growing corporations in China.
Private equity funds are investment companies that pool money from pension funds, insurers, and sovereign wealth funds to buy corporations' equity. Typically, after boosting a corporation's value for several years, they sell to another corporation or fund, or list it on the stock market to earn revenue. Rather than holding equity for long, selling on time and returning principal and gains to limited partners determines business success or failure. Limited partners are usually pension funds, insurers, and sovereign wealth funds that commit money to the fund. Only when a private equity manager returns money to limited partners is the next fund raised and new investments made.
However, the 10 largest private equity managers had no cases last year of recouping capital by selling equity in mainland Chinese corporations. Experts said the path to so-called "exits" has been blocked as China's economic slowdown coincided with U.S. rate hikes. If demand to acquire Chinese corporations falls, private equity must sell below purchase prices and lock in losses. When managers delay sales, money to return to limited partners remains tied up as it is now.
In particular, Chinese authorities continue to raise barriers to keep foreign capital from freely coming and going in sensitive areas such as artificial intelligence (AI). In April, China blocked a transaction in which U.S. Big Tech Meta sought to buy AI startup Manus for $2 billion (about 2.8 trillion won). Manus is headquartered in Singapore but was founded in China. It is a representative case showing that even moving headquarters outside China does not avoid Chinese regulatory review.
CK Hutchison, a corporation representing Hong Kong, also postponed a transaction to sell global port assets, including a Panama Canal port, to a consortium led by BlackRock. CK Hutchison halted related procedures after Chinese authorities criticized the port sale. The port is a key waypoint on the maritime Silk Road that Chinese authorities are ambitiously advancing.
Kexiang Li, Asia-Pacific co-head at the Alternative Investment Management Association (AIMA), said, "Geopolitical factors are still acting as a barrier to entry for investment," and noted, "U.S. limited partners think the hassles are not worth the potential gains."
Private equity funds are eyeing other Asian countries such as Japan, India, and Australia as alternative destinations in place of China. EQT recently closed a $15.6 billion (about 21.7 trillion won) fund, the largest ever among Asia-Pacific private equity funds. Blackstone also said in June it completed raising a $13.1 billion (about 18.2 trillion won) Asia fund. The two alone secured $28.7 billion (about 39.8 trillion won) in new capital.
Jonathan Zhu, China chairman at Bain Capital, told Bloomberg, "Private equity managers are trained to analyze economic indicators and industry conditions, but now they look first to politics and geopolitics."
The private equity industry is waiting for transactions to revive even in sectors other than those to which Chinese authorities react sensitively, such as AI and semiconductors. Brian Gu, a partner at Clifford Chance's Hong Kong office, cited as a positive that Chinese corporations' valuations have fallen sharply.