China’s private equity secondary market is experiencing a sharp uptick in activity, driven by attractive valuations and a growing pool of sellers looking to offload assets in a challenging exit environment, according to a report by Reuters.
With notable institutions including Canada’s CDPQ and China-focused CDH Investments reportedly exploring multi-billion-dollar secondary transactions, market participants anticipate continued momentum into the second half of the year.
Secondary transactions – comprising both LP portfolio sales and GP-led continuation vehicles – allow investors to achieve liquidity in the absence of traditional exits via IPO or trade sales. In China, persistent macroeconomic headwinds and geopolitical uncertainty have dampened exit options, prompting GPs and LPs alike to seek alternative routes to monetise holdings.
Canada’s Caisse de dépôt et placement du Québec (CDPQ), which ceased new private equity allocations to China in 2023, is said to be exploring the sale of up to $2bn in Chinese assets via secondary channels, according to sources familiar with the matter.
Meanwhile, CDH Investments is reportedly preparing a multi-asset continuation vehicle to provide partial liquidity for existing LPs across its portfolio.
Continuation vehicles remain a key tool in today’s market, enabling GPs to roll select assets into a new fund structure while offering investors the option to either cash out or roll over their interest.
According to data provider ZERONE, China’s onshore secondary market reached a record CNY77.3bn ($11bn) in H1 2025, up 89% year-on-year. While comprehensive figures for USD-denominated transactions remain unavailable, industry participants suggest activity is also robust in that segment.
Discounts in the China secondary market remain wide, with quality assets trading at 40%-50% below net asset value (NAV), compared to 10%-20% discounts typically seen for US-based assets. This dislocation is drawing attention from global secondaries investors, particularly those with a long-term view on China.
In June, LGT co-led $500m in continuation vehicles managed by IDG Capital, acquiring stakes in a 13-asset portfolio, with Singapore’s GIC also participating – reportedly gaining exposure to Bytedance.
Improving market sentiment is further supporting the uptick. China’s CSI 300 Index is up 7% YTD, while Hong Kong’s Hang Seng Index has risen 25%.
With a robust pipeline of assets coming to market, and continued institutional interest, China’s PE secondary market appears poised for further expansion – providing both liquidity solutions for sellers and entry points for opportunistic buyers.
