The Blackstone Group logo is displayed during the inauguration of the company’s new office in Singapore.
Munshi Ahmed Bloomberg | getty images
Since the pandemic, private equity funds focused on Asia have struggled to raise money, as the industry was sitting on massive unsold assets and worthless dry powder.
Signs of growing confidence began to emerge late last year as exit values rose and cash distributions to investors resumed, encouraging private equity to resume preparations to launch new funds after several years of lull in activity.
But now, that ray of optimism is battling economic disruption caused by the war in the Middle East. According to many industry experts, the turmoil in global markets has brought a new layer of uncertainty, threatening to sap investor appetite for the market that was just beginning to recover.
“What we are seeing now is not dissimilar to the tariff situation at the beginning of last year – which is causing people to pause, slow down and just wait – to avoid any sudden shocks,” said Andrew Thompson, head of asset management and private equity for Asia Pacific at KPMG. “It’s just the uncertainty that causes things to slow down a little bit,” he said in an interview with CNBC.
Against a backdrop of rising uncertainty, the Middle Eastern Investment Fund, a major source of capital for private equity globally, may take a pause with outbound commitments, at least for the near term, Thompson said. “Now is not the time to go out there raising money. They have bigger issues to worry about right now.”
Asia-focused private equity firms saw new money raised last year fall to the lowest level in more than a decade, netting just $58 billion. Bain & Company report This week. This marked the fourth consecutive year of recession, as aging assets and underperforming funds offset a modest improvement in increased liquidity from rebounding exit values.
According to Bain, Asia’s share in global fundraising also fell to just 5% last year.
Yet 2025 ended with hopes of confidence returning, as net cash flow to fund investors (so-called limited partners, or LPs) turned positive for the first time since 2021, providing partial relief to liquidity pressures.
Dealmaking picked up again last year as Asia-Pacific became the largest region in terms of IPO proceeds and merger-and-acquisition activity increased as market conditions eased.
The Iran war is in its fourth week, with little clarity on the prospects for a diplomatic off-ramp, prompting investors to reduce rate cut bets and brace for potential energy supply shocks.
“The prolonged war and long-term high-rate environment are again driving caution, prompting investors wary of geopolitical risks to avoid deploying new capital into new funds,” said Edoardo Grigione, capital raising advisor at Alternative Investment Managers.
flight to quality
Even as investors have become more selective about fund commitments, the sector’s largest and more established managers continue to attract capital, indicating a widening gap with their underperforming peers.
“The amount of capital targeting the sector in 2026 is higher than a year ago, although it is concentrated at the top end of the market,” PitchBook Private Capital analysts Ansel Tan and Melanie Tng said in an email. “Smaller or less differentiated private equity fund managers Longer deadlines and more difficult circumstances will be faced,” he added.
Signaling some momentum in a tough market, about 60 Asia Pacific-focused funds are still actively seeking to close funds worth more than $1 billion each. According to Bain, they account for more than 10% of all capital targeted globally.
Early commitments by global managers to launch larger, dedicated Asia vehicles also pointed to investors’ flight to quality, the report said.
According to Bain, the six largest funds had disclosed secured commitments of almost $25 billion by the end of 2025 – and if all reach their target, they will surpass the $58 billion raised by each Asia-Pacific fund combined last year alone.
To name a few, Sweden’s EQT secured $11.4 billion In commitments to its new Asia-focused buyout fund, the fundraising is expected to reach a hard cap of $14.5 billion by the end of the year.
Bain Capital is close to finalizing its sixth pan-Asia private equity fund with a strong presence in Greater China and India. Total $10.5 billionIt is the largest Asia-focused fund to date.
black Stone Is collected over $12 billion For its third private equity fund. kkr has also begun raising funds for its fifth Asia vehicle, $15 billion target.
According to PitchBook, if this pipeline closes at or near the target, it could significantly exceed the total amount raised in Asia-focused PE funds in 2025.
glimpse of optimism
But a lot still depends on how long the conflict lasts. Some expect the structural case for Asia private equity to become stronger once the uncertainty clears.
“Overall, while fundraising may remain selective and disciplined, Asia’s structural growth fundamentals and an expanding retail capital base provide constructive support for 2026,” said Sam Padgett, private equity origination leader at Deloitte Asia Pacific.
In an email to CNBC, Padgett pointed to the roughly $240 billion of dry powder in the region — capital committed but not yet deployed — as evidence that the investment engine hasn’t stalled.
Higher interest rates and geopolitical uncertainty may impact valuations and LP allocations, he said, but they do not eliminate general partners’ fundamental obligation to find opportunities and put capital to work.
Funds typically have five or more years to deploy committed capital, providing a buffer against short-term market disruption.
Benjamin Lohr, Asia fund partner at Herbert Smith Freehills Cramer, struck a similarly constructive tone. “We remain positive on Asian fundraising this year and do not see any slowdown in client activity at the moment,” he said. The email pointed to the resurgence of Hong Kong IPOs as a source of capital being recycled into private markets.
Loehr said investor interest in technology and digital assets, collateral vehicles – vehicles that allow private equity firms to increase the stakes they already own – and private debt remain healthy, sparking a potential recovery in real estate.
“People are waiting for cleaner air,” said Thompson at KPMG. “No one really knows when that will arrive and the uncertainty will slow things down a bit.”
