China to attract more private-equity funds from Middle East and US, Bain & Co says

Asia-Pacific deal value rose 11 per cent to US$176 billion in 2024, according to Bain & Company

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Workers walk past a mural depicting China’s history at the Zhongguancun No 1, an incubation platform for tech companies, in Beijing on March 19, 2025. Photo: AFP

Published: 7:30am, 25 Mar 2025Updated: 8:03am, 25 Mar 2025

Private-equity investments in China could be on a stronger recovery path, bolstered by increased capital from the Middle East and adaptive strategies from US funds, according to Bain & Company.

“A positive momentum for China could lead to a more positive outlook already in 2025 and 2026,” Sebastien Lamy, co-leader of the Asia-Pacific private-equity practice for the global consultancy, said on Friday, adding that several factors were fuelling a potential recovery.

The recent stock market rally triggered by artificial-intelligence start-up DeepSeek’s technological breakthrough had come together with some medium-term trends regarding the China market to improve the outlook, Lamy said.

“Increasingly, we have seen private capital, especially from the Middle East, coming in and starting to fill the private-capital funding gap,” he said.

Geopolitical tensions have made some Western private-equity investors more reserved in the world’s second-largest economy. But the sentiment was different among Middle Eastern sovereign investors, who accounted for 62 per cent of the investments by sovereign wealth funds in China last year, according to data by Global SWF.

“We have started deploying capital in China since 2015 and actually stayed invested in China at the time when a lot of the Western firms pulled out of China and have been accelerating deployment [across] Asia,” Marc Antaki, deputy chief strategy and risk officer of Mubadala Investment, an Abu Dhabi sovereign wealth fund, said at the Milken Global Investor Symposium in Hong Kong on Monday.

In addition, some US-origin funds were adapting their China strategies towards “less risky and exposed” investments, Lamy said, pointing to examples such as cross-border deals.