The Asia-Pacific private equity landscape is entering 2026 with renewed investor confidence, as highlighted in Bain & Company’s Asia-Pacific Private Equity Report 2026. The region has experienced a rebound in liquidity, marked by an increase in exit values for two consecutive years and positive net cash flows to investors for the first time since 2021.
Despite total deal value declining by 8% in 2025, the overall deal count saw a 6% rise. This discrepancy reflects a turbulent year characterized by varying deal values driven by macroeconomic instability, tariff changes, and ongoing valuation challenges. Notably, while exit values surged by 24%, fundraising in the region fell to approximately $58 billion, the lowest level in a dozen years.
Buyout transactions made up approximately half of the total deal value for 2025; however, the average buyout size hit a five-year low of around $438 million, down from approximately $630 million in 2024. The subdued activity in mega buyouts significantly contributed to this decrease in overall deal values.
Sebastien Lamy, co-head of Bain & Company’s Asia-Pacific Private Equity practice, remarked, “Asia-Pacific private equity is entering a more constructive phase, and we are seeing early signs of optimism.” He emphasized that improved exit activity is enhancing liquidity and offering a way to alleviate capital constraints, although fundraising pressures and macroeconomic uncertainties necessitate disciplined project underwriting and proactive portfolio management.
Japan emerged as a leading market, experiencing growth in both deal value (26%) and deal count, aided by corporate governance reforms and favorable financing conditions. Conversely, Greater China maintained its position as the largest deal market in the region, accounting for over 25% of total deal value. This market saw a resurgence in deal counts as policy transparency and improved market sentiment took hold after three years of declines.
Sector dynamics also witnessed changes, with technology, media, and telecommunications remaining dominant but experiencing a decrease in their share of deal value to a decade-low of approximately 25%. Advanced manufacturing and services claimed the second largest market share (22%), followed by energy and natural resources (15%) and healthcare (14%). Retail made a notable comeback, capturing 9.2% of total deal value due to stabilized operating conditions and boosted domestic consumption policies.
Exits represented a key area of growth in 2025, bolstered by vibrant IPO markets and strong public performance. The report noted that IPO and open market exit values rose over 70% compared to 2024, making them the most prominent exit channels once again. The volume of exits surpassing $1 billion also quadrupled year-on-year, reaching its highest level since 2021. Trade exits demonstrated robust growth as well, increasing by more than 60% and ranking as the second-largest exit channel.
In a notable shift, Greater China reclaimed its title as the region’s largest exit market, with exit volumes and values soaring by 76%. Meanwhile, India’s exit values grew by 13% as investors took advantage of highly valued public markets, while South Korea’s exit values surged 38%, driven by a depreciating currency that made assets attractive to international investors.
Despite these positive trends, challenges remain as the market grapples with aging holdings and underperforming vintages from 2020 to 2022, leading to a structural exit overhang. Companies held for over five years increased by 18% compared to the previous year.
Fundraising efforts remain weak, marking the fourth consecutive year of decline, with approximately $58 billion raised in 2025, bringing the region’s share of global fundraising down to about 5%. Japan-focused funds were a bright spot, raising $15 billion, an increase of 12% year-on-year.
Amid these challenges, some encouraging signs emerge. Approximately 60 funds in the region, each targeting sizes greater than $1 billion, remain active, representing over 10% of global fundraising targets. Several large funds have received early commitments, and if all these funds reach their targets in 2026, they could collectively exceed the 2025 total.
Furthermore, net distributions turned positive after three consecutive years of net outflows, slightly easing liquidity pressures for limited partners. Median valuation multiples also saw an uptick to approximately 13.4 times, reflecting a recovery in public market conditions.
The report also underscores the growing significance of artificial intelligence (AI) within the private equity domain, as it increasingly shapes investment strategies and operational frameworks. Fund managers are now assessing AI’s potential to augment or revolutionize business models, recognizing that successful integration can lead to substantial returns.
Ben MacTiernan, a partner in Bain & Company’s Private Equity practice, emphasized the importance of integrating AI into investment analysis, noting, “The advantage will go to funds that combine sector insight with execution capability.”
