SHANGHAI – Apr 23, 2025 – After two consecutive years of decline, the private equity (PE) market in Greater China showed tentative signs of recovery in 2024, according to Bain & Company’s latest Greater China Private Equity Report. Overall deal value experienced a modest rebound of 7% to $47 billion in 2024 compared to the previous year, supported by a rise in mega transactions exceeding $1 billion.

The uptick in deal value is largely attributed to the resilience of buyout deals, whose average sizes increased significantly, as investors navigated a market reshaped by geopolitical uncertainty and persistent macroeconomic headwinds. Growth deals still dominated the market by volume, but buyouts emerged as a more influential driver of value creation, accounting for 29% of total deal value, the highest ever recorded.

“The strategic pivot by general partners (GPs) from traditional growth capital plays towards buyouts is driven by several factors, including slower economic growth, increasing installed base of PE owned companies leading to more buyout opportunities, and founders prioritizing professional management and scalability, leading to a more open attitude towards buyouts,” said Hao Zhou, head of Bain’s Greater China PE practice. “Moving forward, this would be an interesting trend to watch.”

Investment activity showed a clear difference in strategy between USD-denominated and RMB-denominated funds. USD GPs focused on defensive, traditional sectors such as healthcare, services, and retail. In contrast, RMB GPs doubled down on national-priority industries such as semiconductors and electric vehicles. The report found that government affiliates have doubled their deal activities last year compared to the previous five-year (2018-2023) average. Global GPs, on the other hand, saw a sharp decline in deal activity representing just 6% of total deal value in 2024 compared to 24% in the previous five-year average. Domestic GPs’ contribution to total deal value also dropped slightly, mostly due to decreased investment in USD-denominated funds, while they remain stable in RMB deployment.

Deal exits plunged further in 2024 driven by a lackluster IPO market. Shrinking exit channels and inconsistent returns added challenges to the market. Fundraising in Greater China-focused funds remained muted and concentrated towards top funds. The top 10 GPs accounted for about 70% of fundraising in 2024 compared to 30% in 2020. Large GPs' proven track record and operational expertise make them more attractive in the selection.

“In response to challenging operating conditions, GPs are now developing new playbooks. In addition to a shift from growth to buyout, GPs are also looking at more cross-border and bolt-on deals. However, this shift requires building completely new capabilities,” said Nancy Zheng, a head of Bain’s Greater China M&A practice.

Cross-border deals by domestic GPs saw a strong rebound in 2024, and were often tied with strategic investment angles such as acquiring international companies leveraging local market expertise and local networks to accelerate growth in China, to leverage China's supply chains and R&D capabilities to facilitate speedy product development and market entry, and to unlock strong synergies across the value chain with existing portfolios.

Bolt-on acquisitions are also generating higher returns as dampened economic conditions support smaller acquisitions, industries under immense pressure are consolidating, and more policy support.

Under the uncertain macro environment, Bain recommends PE firms to consider a three-step approach to supporting portfolio companies as they evaluate risks and develop agile strategic plans. First, evaluate exposure to trade flows and resulting changes in cost structure; second, examine shifts in competitive and relative cost positions; and finally, evaluate product demand resiliency based on elasticity and customer health. For new investment, it is also critical to apply additional lens to fully understand the impact on the target asset.

# # #

Media contacts:

Ann Lee (Singapore) - ann.lee@bain.com

Jasmine Zhao (Shanghai) – jasmine.zhao@bain.com

About Bain & Company

Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.