Asia Private Capital
Q3 2026

A mixed third quarter for Asia private capital. Deal activity rose 8% quarter-on-quarter, yet fundraising stayed under pressure despite a handful of notable fund closings, and buyout volumes continued to decline even as exits picked up, helped by a resurgence in secondary buyouts and several large venture-backed IPOs. The picture is one of selective deployment and engineered liquidity rather than a broad-based recovery, with cautious optimism that Q4 will once again prove decisive for the year. 

Our analysis below examines where the regional divergences are sharpest, why continuation vehicles remain more talked about than executed, and what a recent English Commercial Court decision on contractual valuations means for exit mechanics.

M&A

Asia continues to ride the buyout rollercoaster

Unpredictability is the one consistent theme in the Asia M&A buyout market in recent years. Last quarter, we questioned whether this year would again be a game of two halves, and Q3 results are keeping us guessing.

The market remains difficult, but is not inactive. Buyout activity continued to decline, and venture capital volumes fell back from a strong Q1, but exits showed renewed activity, particularly through secondary buyouts and a handful of large venture capital-backed IPOs.

For private capital clients, that combination points to a market in which deployment remains selective, liquidity is being engineered, and legal execution is likely to matter more, not less.

Buyouts continue to face a challenging environment in Q3

Source: Preqin, data as of 6th October 2026

We are seeing the tactics of slower markets being brought into transactions, with greater due diligence, more robust negotiation, greater downside protection, stronger warranty packages, earn-outs, and a close eye being kept on material adverse change language and termination rights.  

However, this is also giving rise to tactical bidding, with buyers testing pre-emptive bids and bilateral transactions.  This can prove compelling for buyers who come to a deal with clear planning, identified risks, clear regulatory analysis and sequencing, and a strong execution.

Exits: Secondaries and IPOs improve Q3 numbers

As we see in the charts below, secondary buyouts increased significantly in Q3 which, together with a handful of significant IPOs, has been the driver of the exit growth between Q2 and Q3. 

Secondary buyout exists see growth in Q3

Source: Preqin, data as of 6th October 2026

The continuing growth of the secondaries market is important as it is offering an alternative route to DPI, particularly for high-quality assets where another fund can underwrite the next phase of growth, which we discuss in greater detail below.

IPOs

In spite of a continued strong year for tech-related VC investment, Asia VC deals have continued to decline in Q3 after a strong start to the year. However, five large IPOs drove deal value in Q3 for VC exits, showing there is still appetite for good quality assets brought to market. These were ChangXin Memory Technologies (US$8.3 billion), Zhongji InnoLight (US$6.8 billion), Luxshare (US$3.1 billion), Shein (US$1.7 billion) and Manipal Health Enterprises (US$1.0 billion).

Value of VC exits in Asia jumps in Q3 with five large IPOs

Source: Preqin, data as of 6th October 2026

Despite the challenges, the Asia M&A and private capital market has shown solid levels of activity in Q3 and has bucked the downward global trend by posting a reported 8% rise since Q2 and 36% year-on-year growth. 

Whilst the market is rewarding selectivity, there is a certain level of optimism that Q4 will once again define the year. For sponsors, funds and portfolio companies, this will require treating exit readiness as an ongoing discipline rather than a final step in the process. 

Funds

Pressure on Asia fundraising continues, even with some notable closings

Asia fundraising remains challenging and the trends we have described since 2025 continue to affect this current market cycle. The Q3 numbers again show fewer commitments and fewer fund closes compared to previous quarters.

This does not mean that capital has left the region. LPs are still backing Asia, but they are doing so very selectively, favouring managers with scale and a track record of exits. This is shown by a bump in capital raised in Q2 which is attributable mainly to three large fund closings.

Quarterly Asia private capital fundraising (closed funds)

Source: Pitchbook, data as of 6 October 2026

As has been the case for some time now, smaller funds managed by emerging managers continue to find fundraising difficult. Many are staying in the market longer or are leaning on targeted co-investments, project funds, managed accounts and other bespoke capital solutions to build a track record that gives them the permission to raise large checks from institutional investors.

The current Asia fund market falls into two camps: China, Japan and South Korea are dominated by domestic capital, and India and Singapore attract proportionally more international capital.

Commitments by LP location YTD 2026 - India and Singapore see the most cross-border LP activity

Source: Pitchbook, data as of 6 October 2026

Continuation vehicles: useful tool, difficult execution

We brought together leaders in the secondaries community at our Secondaries Exchange in Singapore in late September. Participants discussed the current state of the secondaries market, and a few things became clear:

• specialist secondaries investors are seeing opportunities in the Asia market with attractive upside for both selling investors and lead investors
• GPs are becoming more confident around pricing, supported by strong data (Evercore's July 2026 report suggests that ca. 52% of deals price at par)
• W&I insurance is becoming increasingly available and supports deal certainty and execution
• continuation vehicles are a frequent topic in Asia but have not yet attained the status of a mainstream exit route
• Asia is still lagging behind a little when it comes to execution capability

Source: Pitchbook, data as of 6 October 2026

Distributions are picking up (we think)

One encouraging feature of the latest data is that Asia funds appear to have accelerated returning capital. Median DPI has been increasing in recent figures available to us, although the figures should be treated with some caution considering the small and fluctuating sample sizes.

Median DPI at age of fund: Distributions slowest for 2021 vintage

Source: Preqin, data as of 6 October 2026

Regardless, this picture is consistent with what we see in the market: increased focus on and success in generating liquidity. While the lagging distributions remained a topic in recent discussions in Singapore, we are cautiously optimistic that distributions will accelerate and, combined with secondaries transactions, generate increasing liquidity levels for LPs.

Hong Kong tax changes: supportive, but not a standalone fix

Hong Kong is currently going through the legislative process to update its unified funds tax exemption and carried interest scheme.

In short, the unified funds tax exemption is proposed to apply to investments in credit and digital assets and to apply, for example, to certain single investor funds. It will therefore widen in scope at the asset level and at the fund/investor level. The proposals around the carried interest tax exemption improve clarity, bring hedge fund carry within scope, and reduce the administrative hurdles for managers.

Hong Kong's proposed enhancements to its preferential tax regimes arrive at a good time. As managers work harder to justify regional allocations, the proposals signal that Hong Kong wants to remain a competitive structuring and investment management hub for Asian private capital.

Singapore promptly responded with its own proposed tax incentives that attempt to mirror those of Hong Kong. It will be interesting to see whether Hong Kong can gain a competitive advantage and attract additional GP resources. In any event, both Hong Kong and Singapore remain competitive locations for fund managers.

Disputes

When an exit turns on valuation

Exit conditions remain challenging, and contractual exit mechanisms may therefore continue to play an important role. Where those mechanisms depend on a valuation, for example in determining the price payable on exercise of a put option, disagreement over value can quickly become a dispute.

A recent English Commercial Court decision from September 2026 provides useful guidance on how such disputes may be approached. Tour des Finances NV GVBF v CBRE Loan Services Ltd [2026] EWHC 2321 (Comm) (available here) arose in a different context, concerning a property valuation used to determine whether a loan-to-value cash trap had been triggered. However, the court's analysis has wider relevance to contractual valuation disputes. The borrower challenged the €920 million valuation on the basis, among other things, that the lenders had interfered with the process and the valuer lacked independence.

There were reasons to scrutinise the process closely. A previous valuer had resigned referring to pressure on the valuation process, while the replacement valuation was produced quickly and aspects of the valuer's work were criticised by the court. Nevertheless, the court found no improper pressure, dishonesty, bad faith or bias. The valuation therefore stood: as the judge said, it may not have been a “good job”, but it was a “sufficient job” and was not a “put up job”.

The decision illustrates the difficulty of challenging a contractual valuation simply because the process was imperfect or another valuer might have reached a different conclusion. Poor valuation work is not necessarily invalid valuation work.

Parties can seek to reduce that risk through the drafting of the valuation process itself. The contract might, for example, prescribe particular valuation methodologies or assumptions, or require the valuer to take specified information supplied by the company into account. Greater prescription can promote consistency and rigour, but comes with a cost: it can make the process slower, provide opportunities for an uncooperative counterparty to obstruct it, and create additional grounds on which the resulting valuation may be challenged. Depending on the purpose of the mechanism, an imperfect valuation that is produced quickly and is final may sometimes be preferable to a more rigorous process that is slower and more susceptible to challenge.

The parties can also address the standard of review, including by providing that a valuation is final and binding except in cases of “manifest error” or by agreeing a different threshold for reopening it. Again, the appropriate balance will depend on the relative importance of finality and speed versus the ability to correct an erroneous outcome.

The key question when drafting an exit valuation mechanism is therefore what the valuation is intended to achieve and how it plays into an exit or enforcement strategy. If speed and finality matter most, a party may prefer to accept some risk of an imperfect result. If precision is critical, a more prescriptive methodology and wider review rights may be appropriate, accepting the corresponding risk of delay and dispute. Either way, the drafting should anticipate what happens if a counterparty does not cooperate, what information the valuer will need and precisely which shortcomings, if any, permit the valuation to be reopened.