Private Equity in China Heads for Exits Amid Three-Year Stock Slump

PE and venture capital investors seek new strategies as investments, fundraising and IPOs decline

Private Equity and venture capital investors, once enthralled with China, are now struggling to find new investment strategies – or just the exits – as Chinese stocks extend a three-year slump.

In the first three quarters of 2023, indicators for fundraising, investment and exits by PE and VC firms in the Chinese market all declined, according to equity investment research institution Zero2IPO Group. The number of new funds dropped by 2.1% from a year earlier to 5,344 and the scale of these funds fell 20.2% to 1,352 billion yuan ($187 billion).

“After the Spring Festival holiday in 2023, everyone was on the road, expecting a recovery and rally in the market,” said Wang Lixing, managing director of PE firm China Renaissance Holdings Ltd. But by April, when the anticipated rally didn’t materialize, PE and VC firms’ willingness to make deals declined and the negative trends were reinforced by a string of disappointing economic reports, Wang said.