Private Equity - China

China

The deal value in the Private Equity market is projected to reach €36.66bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2025) of 5.05% resulting in a projected total amount of €38.51bn by 2025.
The average size per deal in the Private Equity market amounts to €140.40m in 2024.
From a global comparison perspective it is shown that the highest deal value is reached in the United States (€545,100.00m in 2024).
In the Private Equity market, the number of deals is expected to amount to 0.32k by 2025.

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Analyst Opinion

The Private Equity Market in China is witnessing a negligible decline, influenced by factors such as regulatory challenges, shifting investor sentiment, and economic uncertainties. Despite these hurdles, strategic investments continue to emerge, shaping the market's future landscape.

Customer preferences: Investors in China's Private Equity Market are responding to a notable shift towards sustainable and socially responsible investments, driven by heightened consumer awareness of environmental issues and a growing demand for ethical practices. This trend is particularly influential among younger demographics, who prioritize brands with a commitment to sustainability and social impact. As a result, private equity firms are increasingly allocating capital to eco-friendly technologies and companies that align with these evolving consumer values, shaping a more conscientious investment landscape.

Trends in the market: In China, the Private Equity Market is experiencing a robust shift towards sustainable investing, as firms increasingly prioritize environmental, social, and governance (ESG) criteria in their investment strategies. This trend is driven by a surge in consumer awareness around climate change and social responsibility, particularly within the younger population, who advocate for ethical business practices. As private equity players pivot towards renewable energy, green technologies, and sustainable consumer goods, this movement not only reshapes investment portfolios but also fosters innovation and resilience in industries, ultimately enhancing economic stability and long-term growth.

Local special circumstances: In China, the Private Equity Market is significantly influenced by the government’s strong regulatory framework promoting sustainable development and climate initiatives. The country's unique cultural emphasis on collective well-being and harmony fosters a growing demand for socially responsible investments. Additionally, urbanization and rapid technological advancements create opportunities in green technologies and renewable energy. This combination of regulatory support and cultural values drives private equity firms to align their portfolios with sustainable practices, thus reshaping market dynamics and promoting long-term growth.

Underlying macroeconomic factors: The Private Equity Market in China is significantly shaped by overarching macroeconomic factors, particularly central bank policies and interest rates. The People's Bank of China’s monetary policy, including interest rate adjustments, directly influences the cost of capital for private equity firms. Lower interest rates create an environment conducive to leveraging investments, enabling private equity firms to acquire and support portfolio companies. Conversely, rising rates can constrain access to financing, impacting deal-making activity. Additionally, global economic trends, such as trade dynamics and foreign investment flows, further affect market performance, emphasizing the interconnectedness of domestic and international economic conditions in shaping private equity strategies.

Methodology

Data coverage:

The figures are based on deal value, number of deals, the average size of each deal, and assets under management within the Private Equity market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, such as: GDP, total investment (% of GDP), household wealth (per Adult), high income (% of population), and number of high-net-worth individuals (HNWI). This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are total investment (% of GDP), household wealth (per Adult), number of high-income persons, and number of high-net-worth individuals (HNWI).

Additional notes:

The market is updated twice a year in case market dynamics change.