Greater China private equity set for patchy recovery, modest fundraising boost
China’s private equity market recovers selectively amid geopolitical tensions, with yuan funds leading and exits reaching record highs
Greater China’s private equity market continued to recover last year amid expectations of a market improvement, but looking ahead, fundraising will remain selective and performance-driven, while geopolitical uncertainties are the largest variable for the markets this year, according to Bain & Co.
Improving exit conditions and continued capital supply could offer attractive opportunities for well-positioned investors despite intensifying capital competition and a widening gap between top-tier and mid-tier firms, the consultancy said in its 2026 Greater China private equity report on Tuesday.
“Recovery is under way but it is uneven and highly selective,” said Hao Zhou, head of Bain’s Greater China PE practice. “We are seeing capital flow to a narrower set of opportunities, particularly where investors have clear conviction on sector themes and the ability to actively drive outcomes post-investment.”
Geopolitical uncertainties are the largest variable for the markets this year, he added.
Yuan-denominated funds continued to grow and became the dominant source of new capital, with traditional US dollar-denominated general partners also raising yuan funds, according to the report. Notably, Greater China-focused US dollar-denominated fundraising declined further last year, in line with broader Asia-Pacific trends.
The decline in US dollar-denominated fundraising reflects capital overhang in US dollar-fund portfolios that have yet to be exited and realised, limiting their ability to support new fundraising from partners. Meanwhile, Chinese sovereign wealth funds and state-owned enterprises continue to invest in yuan-denominated funds as the largest limited partners.