Author: Noreen Jazul
Source: Hong Kong Business
Investors eye Pan-Asian deals to minimize exposure to US trade risks.
Private equity fund managers are ramping up investment in Hong Kong, seizing opportunities in real estate and diversifying into healthcare, consumer goods, and technology, as falling valuations and an improving capital market reset the deal landscape.
“Most Hong Kong-based PE firms are eyeing real estate,” Ka-chun Wong, Hong Kong bureau chief at Mergermarket, told Hong Kong Business in an emailed reply to questions. “A significant drop in property prices has created a good entry point for private equity.”
Prices in Hong Kong’s commercial property market have dropped steeply. Grade A office prices have fallen 51% from their peak, with some mortgagee sales slumping almost 60%, according to Thomas Chak, head of capital markets and investment services at Colliers International (Hong Kong) Ltd. Retail and industrial asset prices have fallen 39% and 32%, respectively.
The correction has left the market “very stuck,” according to Timothy Loh, managing partner at law firm Timothy Loh LLP. He added that private equity firms have stepped in as “vulture buyers,” helping distressed developers and providing capital relief for banks.
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In February, Gaw Capital Partners injected $758m in equity and a $500m senior unsecured note into CSI Properties Ltd., which had been posting losses.
The Hong Kong–based real estate private equity firm is also raising a $15.6b (US$2b) fund to back private credit and equity investments in tier-1 and tier-2 cities across the Asia-Pacific region including Hong Kong, Reuters reported in May.
Thomas Crasti, M&A advisory partner at PwC Hong Kong, said other areas are drawing private equity interest, particularly healthcare and business services.
Wong noted that multinationals have been divesting parts of their consumer portfolios. Hong Kong startups in the sector are gaining traction with private investors, said Tracxn Technologies Chairperson Neha Singh.
Technology is also rising on investor radars. Ben Jelloun, managing partner at GCCVest Partners, cited artificial intelligence and robotics as focus sectors, pointing to Chinese AI company DeepSeek as a catalyst in attracting fresh capital back to Asia.
Andrew Lam, managing director of assurance at BDO Ltd., said information technology and biotechnology in the Greater Bay Area remain especially attractive.
Crasti expects private equity firms to continue expanding beyond China, pursuing Pan-Asian investments to diversify and minimize exposure to US trade risks. In January, Pacific Alliance Group acquired a majority stake in Indian pharmaceutical packaging company Pravesha Industries, illustrating this trend.
Still, some investors are keeping an eye on Chinese companies with global ambitions.
IPO momentum
“We are continuously trying to identify leading mature companies, dominant locally but with high potential for growth globally,” Jelloun told Hong Kong Business by telephone. Singh noted that Hong Kong investors “prioritise international expansion and innovation.”
Market sentiment has improved with Hong Kong’s stronger capital markets. Lower interest rates, abundant funds, and an upbeat investor outlook are expected to support deal activity, Lam said.
“If the stock market in Hong Kong continues doing very well, that will encourage more investment into the private equity markets in the next 12 months,” Jelloun said. He added that stronger equity performance has boosted the initial public offering (IPO) momentum, feeding pre-listing investment opportunities.
Hong Kong logged its strongest IPO performance since 2021 in the first half, with 42 listings raising $107.1b, KPMG data showed. Wong said the surge in IPOs is opening up late-stage, pre-IPO deal flow for private equity firms.
The rebound is also visible in startup financing. Hong Kong tech companies raised $778m (US$100 million) in late-stage funding in the first half of 2025, reversing from zero funding in the second half of 2024, according to Tracxn data. Singh said this reflects renewed confidence, alongside growth in AI, travel, blockchain, and infrastructure.
Crasti said signs of recovery in China should further lift sentiment.
“The outlook looks positive, with several active sale processes ongoing right now and a healthy pipeline of businesses currently undergoing sale preparation, which will likely attract private equity interest,” he added