Hong Kong private equity firms seek control deals

Buyout transactions hit $165.4b this year, double the value of growth investments.

Hong Kong private equity firms are pursuing more buyouts and controlling stakes as pressure grows to return cash to fund investors after several years of slower exits across Asian private markets.

Managers are increasingly looking for businesses they can improve rather than relying on higher valuations to generate returns, Yuki Ishida, director and group CEO at YCP Holdings (Global) Ltd., said in an emailed reply to questions.

Hong Kong-based private equity funds have raised $135.6b (US$17.3b) across three buyout funds in 2026, with EQT AB's BPEA Private Equity Fund IX accounting for $122.3b (US$15.6b), Melanie Tng, an analyst for Asia-Pacific private capital at PitchBook Data, Inc., said in an email.

Private equity investors have participated in $165.5b (US$21.1b) of buyout transactions this year, compared with $80.8b (US$10.3b) of growth investments, she said.

Firms are focusing more on acquiring controlling stakes in mid-sized companies and expanding them through acquisitions, Ishida said.

Recent deals reflect the trend. Funds managed by Boyu Capital Investment Management Co. Ltd. acquired a 60% stake in Starbucks Corporation's China retail business in April in a deal that valued the business at about $31.4b (US$4b).

Templewater Hong Kong Ltd. has also expanded its healthcare platform through acquisitions, including The Women's Clinic Group Ltd. and Ascensus Health Group Pte. Ltd.

Investors are placing greater emphasis on receiving cash distributions after a prolonged slowdown in exits across the region, Tng said.

Business-to-business companies have attracted $90.2b (US$11.5b) from private equity investors this year, whilst information technology companies drew $76b (US$9.7b), she added.

Ishida said data centres and semiconductor companies remain attractive as artificial intelligence (AI) drives demand for computing power.

Henry Chui, head of private wealth for Asia-Pacific at Partners Group Holding AG, said the firm has become more cautious on data centres as valuations rise.

Instead, we focus on adjacent areas of infrastructure,” he said via Zoom, citing power generation and storage. “Power usage in the US is expected to increase significantly compared with the last 20 years as the data centre build-out continues.”

‘Selective investor confidence’

Private equity firms are also participating in later-stage funding rounds for tech companies that have already attracted customers, particularly in financial services and AI, Neha Singh, chairperson and managing director at Tracxn Technologies Ltd., said in a Zoom call.

She cited August Robotics Ltd.'s $235.3m (US$30m) Series B funding round for construction robotics used in data-centre development and Grace Investment Machine Ltd.'s $156.8m (US$20m) Series A funding round for software used in investment and capital markets.

Investors remain selective, however. PitchBook recorded 14 private equity deals in Hong Kong in the first half, unchanged from a year earlier, whilst estimated deal value fell to about $18b (US$2.3b) from $22.7b (US$2.9b), Tng said.

“The largest transactions in the first half ranged from minority growth investment to a corporate divestiture and an add-on acquisition,” she said. “The transactions point to selective investor confidence.”

Hong Kong-based firms continue to invest beyond the city. Asia attracted 35 of 61 transactions announced this year and about $86.3b (US$11b) in disclosed investment, Tng said.

At the country level, the US received $82.3b (US$10.5b), followed by Mainland China at $67.4b (US$8.6b), the UK at $52.5b (US$6.7b), and Australia at $22b (US$2.8b).

Chui said Hong Kong often serves as a base for private equity teams investing across the region rather than solely in the local market.

He cited corporate carve-outs and business succession opportunities in Japan, as well as industrial modernisation in China, as areas attracting investor interest.

Ishida said tighter restrictions on cross-border capital flows could make fundraising, dealmaking, and exits more difficult.

“This would directly affect fundraising, deal execution, and exits because Hong Kong's competitive advantage depends on remaining an open interface between Chinese, Asian, and global capital,” he said.