2025年亚太私募股权年鉴——中国市场聚焦版_22页_3mb

2024 China PE/VC Market Summary

Core Content

The 2024 China private equity (PE) and venture capital (VC) market underwent significant transformation, marked by a shift in investment focus, capital sources, and exit strategies. Despite challenges such as valuation adjustments, geopolitical tensions, and a freeze in IPO activity, the industry demonstrated resilience and adaptability.

Main Points

1. Fundraising Trends

• Decline in Fund Creation: The number of newly established PE/VC funds dropped by 44% in 2024, with total fundraising target amount falling by 30% to RMB269B.
• Capital Sources: RMB-denominated funds dominated, with 99% of fundraising coming from domestic sources. Foreign currency funds represented only 1%, down 48.6% in value.
• State-Owned Capital Dominance: State-owned and government-guided funds were the primary capital providers, contributing 50% of the total deal value. They also became a crucial support for USD-based GPs.
• Examples of State-Owned Fund Participation:
  • Primavera Capital launched the "Primavera Shandong-Guangdong Industrial Upgrade Fund" in February 2024.
  • Carlyle Group established the "Carlyle Asia Industrial Upgrade Fund" in March 2024.
  • PAG introduced the "PAG RMB Fund I" in June 2024.
  • Primavera Capital continued with the "Primavera New Energy and Intelligent Manufacturing Fund" in 2025.

2. Investment Trends

• Deal Activity Decline: The number and value of deals in 2024 declined slightly compared to 2023, but VC remained the most active segment, accounting for 76% of total deal count and over 50% of total deal value.
• Sector Focus Shift: Investment shifted towards government-backed sectors, particularly semiconductors, healthcare, and advanced manufacturing.
• Notable Deals:
  • Changan Automobile's AVATR raised RMB11B.
  • Huaneng Renewables secured RMB15B.
  • Rednote raised US$17B.
  • Moonshot AI attracted over US$1.3B.
  • Zhipu AI received multi-billion RMB funding.

3. Exit Strategies

• Diversification of Exits: With the IPO market struggling, M&A became a more prominent exit channel, with 376 private equity funds achieving exits in 2024, up 23% from 2023.
• IPO Activity Decline: Only 227 companies completed IPOs in 2024, down 68% from 2023. The total amount raised was RMB148B, a 63% decline from the previous year.
• IPO Penetration Rate: The PE/VC penetration rate in IPOs fell from 70% in 2022 to 58.6% in 2024, indicating a reduced reliance on IPOs for exits.
• Regional Preferences:
  • A-share Market: Focused on advanced manufacturing and electronic information.
  • Hong Kong Market: Concentrated on electronic information and life science and healthcare (LSHC).
  • US Market: Dominated by auto and electronic information sectors.

4. Policy Support for M&A

• Government Initiatives: A series of supportive policies were introduced to facilitate M&A exits, including:
  • Encouraging cross-border M&A and overseas listings.
  • Supporting industrial chain integration and cross-sector convergence.
  • Promoting specialised M&A funds and professional fund managers.
• Policy Implementation: Nearly 10 regions issued policies to promote M&A and restructuring, indicating a structural shift in the market.

Key Information

• The private equity landscape in China is transitioning from a focus on high multiples to value creation.
• State-owned capital and government-guided funds are becoming the backbone of the market, especially in hard-core technology sectors.
• Middle Eastern sovereign wealth funds (SWFs) have increased their presence in China, filling the gap left by Western funds and engaging in direct investments and strategic partnerships.
• The IPO market has become increasingly unstable, with a significant decline in both the number and value of listings, particularly in the A-share market.
• M&A activity has risen, driven by policy support, regulatory changes, and the need to address unrealized vintage funds.
• The PE/VC industry is entering a new market cycle, characterised by strategic realignment and operational focus.

Conclusion

The 2024 China PE/VC market has experienced a period of adjustment and transformation, with a clear shift towards policy-aligned sectors, M&A exits, and state-backed capital. While the IPO market remains constrained, the industry is adapting by exploring alternative exit channels and focusing on value engineering. The role of state-owned and government-guided funds has become more pivotal, and international capital, particularly from the Middle East, is playing an increasingly active role in the market. These changes signal a new paradigm in China's private equity landscape, driven by economic restructuring, geopolitical dynamics, and regulatory reforms.