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SummaryInvestors 'overallocated' to dollar assets - EQT Asia chairmanHong Kong, China 'big beneficiaries' of shift away from U.S.Valuation reset behind the renewed interest - Warburg Pincus CEO HONG KONG, Nov 5 (Reuters) - Global private equity partners are eyeing a return to China after staying on the sidelines over the last few years, encouraged by cheaper valuations and as investors pare U.S. allocations, top fund executives said on Wednesday. "Investors, particularly the non-U.S. ones, feel like they are overallocated to dollar assets," Jean Eric Salata, Chairman of EQT Asia told the Global Financial Leaders' Investment Summit in Hong Kong. Advertisement · Scroll to continueReport Ad One of the "big beneficiaries" of their diversification and rebalance is going to be Asia, and particularly Hong Kong and China, according to Salata, who was nominated last month as the Swedish firm's new board chairperson. Private equity funds have found the Chinese market challenging in the last few years as economic headwinds, geopolitical risks and regulatory tightening weighed on valuations and restricted exits. "We like China - actually the valuations are cheap. Debt is cheap. There's almost zero competition, and there's some great companies," Chris Gradel, co-founder and CEO of PAG said during the summit. Advertisement · Scroll to continue "Many of our peers have kind of pulled away, both from China and from Asia, but ... I think it's going to continue to be an interesting opportunity," Jeffrey Perlman, CEO of Warburg Pincus said at the same event. "The challenge for the previous few years was that the valuations hadn't reset," he added, "Now that they've reset on a relative basis, it's getting quite attractive." Private equity-backed deals targeting Chinese companies have totalled $25 billion so far this year, already exceeding 2024's annual amount and poised to be the highest since 2021, Dealogic data showed. Starbucks earlier this week announced the sale of a controlling stake of its China operations to local private equity firm Boyu Capital. More than 20 global and regional funds showed interest in the bidding process, sources have said. Ad Break Coming Up NEXT StayNext OffEnglish 180p288p360p480p540p576p720pHD1080pHDAuto (180p) About ConnatixV2139381526 About ConnatixV2139381526 Continue watchingafter the adVisit Advertiser websiteGO TO PAGE Foreign funds have a mandate to look for alternatives as their clients shift away from heavy exposure to U.S. assets after U.S. President Donald Trump began a punishing trade war soon after taking office in January. That has led to an about 5% to 7% change in overall allocations, as funds reduce holdings from "hyper exceptional down to exceptional" levels, Warburg Pincus's Perlman said. The capital allocated out of the U.S. may end up coming to Asia, he said. Reporting by Selena Li and Kane Wu; Editing by Kate Mayberry Purchase Licensing Rights Kane WuThomson ReutersKane Wu covers M&A, private equity, venture capital and investment banks in Asia. She tracks the region's most high-profile deals, fundraisings as well as investment trends amidst geopolitical, macroeconomic and regulatory changes. She was nominated for a SOPA Excellence in Business Reporting award for coverage of China regulatory crackdown in 2021. Prior to Reuters, she worked at the Wall Street Journal and also wrote about Asia's loan market for Thomson Reuters Basis Point. She is based in Hong Kong.EmailX
