The private equity market in China is likely to slow down after years of massive growth as worldwide investors show increasing concerns around the country’s dropping economic growth and widening investment risk, according to a recent Bain & Co report, reports Caixin.
Rising geopolitical tensions and tighter industry regulations cast a cloud over the Greater China region’s initial public offering (IPO) market in the second half of 2021. The value of IPOs dropped 50% in the second half from a year earlier, according to the report.
Weak stock markets in mainland China and Hong Kong contributed to an unattractive exit environment, Bain said. Policy uncertainty and poorly performing public markets left China unable to support the high IPO multiples required for a profitable exit, the company found. Those conditions could continue to dampen China’s exit market in 2022, the report said.
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