China’s private capital fundraising sinks to record low of US$3.4 billion on poor outlook
- The second quarter fundraising came in at US$3.4 billion, less than a tenth of the average US$45 billion raised each quarter between 2019 and 2021
China-focused private capital fundraising tumbled to a new low of US$3.4 billion in the second quarter as investors turned their backs on the world’s second-largest economy, citing economic headwinds and exit uncertainties, according to data provider Preqin.
The latest tally was less than a tenth of the average quarterly amount of US$45 billion between 2019 and 2021 as geopolitical tensions, weak market performances and liquidity constraints weighed on investor sentiment towards China, Angela Lai, lead author of Preqin’s Asia-Pacific (APAC) quarterly report published on Wednesday, said in an interview.
The asset classes covered include private equity, venture capital, private debt, real estate and infrastructure.
“China-focused funds are still having a very challenging time,” said Lai, who is also the head of APAC for valuations and research insights at Preqin. “We are talking about coming down from such a high level … it’s almost like there is a limited downside you can go further from here.”
Total private capital raised for China dropped consecutively for four quarters after a slight uptick to US$10 billion in the second quarter of last year, according to Preqin.
“There is still not a lot of willingness to add exposure to the China market,” said Lai. Foreign investments have not been allocated to China as much as before, putting pressure on the overall deal environment and valuations, she added.
