The country-focused PE firms have also been hunting overseas.
[HONG KONG] The buoyant mood around deals is reverberating through Asia, with major markets such as China picking up the pace after a spell in the doldrums and Japan turning in record volumes.
“The investment banking pipeline across this region is one of the strongest I have seen,” said Jan Metzger, Citigroup’s co-head of investment banking in the Asia Pacific. “It’s across all areas really, but M&A (mergers and acquisitions) is particularly strong.”
Transaction volume, including M&A, has reached US$1.3 trillion in Apac in 2025, up 21 per cent from last year, data compiled by Bloomberg show. Busy sectors include consumer, health care, telecommunications, media and technology, and financial sponsors, according to Metzger.
Activity accelerated in the second half of the year, teeing things up nicely for the start of 2026, said Edward Freeman, a partner at law firm Freshfields. He highlighted Singapore, Tokyo and Hong Kong, which is a melting pot both for mainland China-focused and international deals.
China flurry
China transactions have reached US$385 billion, a 19 per cent increase from 2024. Some of that’s been sparked by international firms reviewing their operations in the world’s second-biggest economy as local competition intensifies.
Highlights include Starbucks, squeezed by Luckin Coffee’s rise, agreeing to sell a majority stake in its China business to private equity firm Boyu Capital at a US$4 billion enterprise value. Restaurant Brands International is also selling control of the China unit of Burger King to buyout firm CPE.
“Multinationals will continue to reassess their China footprint in 2026, including through partnerships with local companies and private equity firms as they look to optimise their assets for success,” Goldman Sachs co-head of M&A in Apac Ed Wittig said.
Other deals on the horizon include GE Healthcare Technologies’ potential sale of a stake in its China unit, sources familiar with the matter have said.
“A wealth of high-quality assets are poised for sale in the Chinese market,” said Chen Jie, global head of M&A at China International Capital Corporation (CICC), who also flagged corporate strategy adjustments and intense competition as triggers, as well as succession shakeouts at family-owned businesses.
At the same time, M&A enables companies to obtain cutting-edge technological capabilities, Chen noted. “Consolidation momentum is building across high-growth sub-sectors such as AI (artificial intelligence),” she said.
PE deals
Funds have accumulated plenty of dry powder and need to address strategic and institutional demands, especially as sentiment improves, said Xiaoxi Lin, a partner at Morrison Foerster. That bodes well for M&A and private equity (PE) deals in China, where activity is likely to focus on national priority sectors such as semiconductors, AI and renewable energy technology.
Recent PE deals include Warburg Pincus agreeing to invest in corporate services provider Acclime, and FountainVest Partners and CPE investing in RFID and brand identification firm SML Group.
“Over the past few years, China was effectively off limits for many global private equity firms,” Wittig from Goldman Sachs said. “That is starting to change. Valuations have become expensive in many parts of the world, but in China, they continue to look relatively attractive.”
Take-private transactions such as a US$1.4 billion buyout of Kangji Medical Holdings reflect an inflection point in confidence and could be a precursor to more activity, said Rohit Chatterji, head of M&A in Apac at JPMorgan Chase.
Some deals have not made it over the line. For one, Advent’s planned acquisition of the mainland China assets of contact-lens maker Ginko International fell through mid-year, leading the PE firm to pay about US$10 million in breakup fees.
Outbound transactions
China-focused PE firms have also been hunting overseas.
HSG, formerly known as Sequoia Capital China, is acquiring Italian sneaker maker Golden Goose, as well as a majority stake in audio equipment maker Marshall Group. FountainVest bought a stake in Eurogroup Laminations.
Chinese companies are joining the push too, hunting for premium brands and key resources to bolster their businesses and supply chains, CICC’s Chen said.
“There is also a notable shift towards smaller, high-quality deals in emerging markets such as South-east Asia and the Middle East,” she said.
Anta Sports Products is among the firms exploring a takeover of Puma, while China Southern Power Grid is attempting to take control of Chilean power transmission company Transelec.
“The appetite to expand overseas through acquisitions is back, but it is likely to be more measured and far more focused,” Wittig said. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
