Hong Kong reclaims role as alternative private equity hub in 2025: report

Whilst PE-backed IPO activity in mainland China remains historically low, Hong Kong is increasingly serving as a preferred alternative.

Hong Kong is reasserting its role as a leading financial exit market in 2025, with PwC reporting a surge in private equity (PE) activity shifting away from mainland China to the city’s capital markets.

According to PwC’s China M&A 2025 Mid-Year Review, the Hong Kong Stock Exchange (HKSE) is on track for its best performance in a decade based on the number of PE-backed IPO listings.

Whilst PE-backed IPO activity in mainland China remains historically low, Hong Kong is increasingly serving as a preferred alternative.

The report highlighted stronger capital markets in Hong Kong are driving valuations and exit opportunities, giving sponsors a critical option amid continued market softness in the mainland.

PwC also noted trade sales remain the dominant form of PE exits in the first half of 2025, but activity in Hong Kong is accelerating. Several additional sales are currently in preparation, suggesting that announced deal statistics may understate actual momentum.

The shift toward Hong Kong is part of a broader recalibration within China's M&A landscape. IPO activity on the HKSE is credited with supporting China’s domestic strategic M&A volume, particularly in sectors such as tech and healthcare, which benefited from the launch of Deepseek AI earlier this year.

The outlook for the second half of 2025 remains positive. PwC sees Hong Kong’s robust capital markets as one of the key factors underpinning improved sentiment and deal activity across the region, despite lingering geopolitical and investment policy challenges on the mainland.