For over 20 years Indonesian private equity firm Northstar Group was emblematic of Southeast Asia’s boom. Backed by TPG Capital, it raised more than US$2.7 billion ($3.47 billion) with a pledge to invest in the region’s best firms.
But this year, between the country’s faltering outlook and a scandal that sank a flagship investment, its founders struggled to continue. By June it sold key funds to US investment firm Ares Management Corp for just US$6 million, according to documents seen by Bloomberg News and people familiar with the matter. A representative for the firms couldn’t immediately comment.
As global investors gathered in Singapore’s bars and ballrooms for a series of conferences and annual general meetings this month, Northstar was raised as an exemplar of Asia’s steep challenges. At a time when private equity players in the region should be thriving amid the perceived decline of US exceptionalism, they are instead weathering one of the harshest capital winters in recent memory, as investors remain on the sidelines — India and Japan standing out as rare exceptions.
By the opening panel of SuperReturn Asia’s second main conference day, the moderator asked attendees in the Marina Bay Sands convention centre to raise their hands if they’d made fresh commitments to new funds or companies in the last 12-24 months or if they planned to do so within the same timeframe ahead: a solitary arm went up for both.
“There’s not a lot of private capital. We all know, based on that show of hands, that fundraising last year was 10% of what it was in 2021,” said China-focused Hopu Investment Management Co President Gunther Hamm on-stage. “Structurally valuations are going to be low and they’re going to stay low.”
Reluctant investors
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RAG-Stiftung, a Germany-based endowment with EUR17 billion of fund assets and equity exposure, stands out as an exception. It’s investing more money into Asia against the backdrop of concerns about the US. The firm plans to commit more than US$150 million to PEs through a segregated account in the region in the next four years, said Jan Christoph Gertenbach, deputy head of asset management.
But for most limited partners — pension funds, sovereign wealth funds and family offices — 2025 has brought a confluence of challenges. Economic uncertainty from tariffs and trade wars heightened liquidity needs, just four years after private equity’s fundraising peak. Promised returns have stalled, leaving paper profits trapped in frozen deals.
That means until investors can unlock some capital, they’re reluctant to back new funds. According to a Bain & Co report issued in June, there’s about US$3 of demand for capital from PE firms for every US$1 of supply.
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Nowhere has this trend been worse than in Asia. You-Ha Hyun, principal at Munich-based allocator Perpetual Investors GmbH, said that having looked at the data, his firm was unsure if PEs across the region had delivered on key metrics. These include internal rate of return or distributed to paid-in capital — which measures how much cash an investor receives back.
“LPs want to see results,” said Jefrey Joe, co-founder and general partner of Alpha JWC Ventures, a Southeast Asian venture capital firm. “No one wants to hear a plan anymore.”
This comes at a time when Asia should be thriving. Southeast Asian nations stand to gain from the manufacturing shift away from China, which itself is seeing a long-awaited rebound — rising share prices, renewed listings, and a 41% surge in the CSI 300 over the past 12 months. Hong Kong share sales have also hit a four-year high. Kotak Mahindra Capital Co expected Indian companies to raise over US$30 billion in the year starting July.
“It’s one of our frustrations, because to us it’s so logical that you would try and diversify into a market that’s growing and probably the future,” said Sam Robinson, senior advisor at North-East Family Office, describing the fundraising market as one of the worst he’d seen since the Global Financial Crisis. “Most firms should exit at a 30-40% premium to their last net asset value but now we’re not really seeing that and we’re just glad if it’s a little bit of a premium.”
Part of the problem is that many of the Hong Kong share sales are merely offerings from existing firms, rather than fresh listings. Speaking to a near-empty China-focused session at the DealStreetAsia’s PE-VC summit in Singapore, Trustar Capital managing partner Boon Chew was bleakly honest about the firm’s dollar-denominated fifth China buyout fund.
“We’re one of the few groups that have been foolish enough to be fundraising a China fund over the last two years,” he said. “We will do a final close soon at about US$1.3 billion and most people say ‘oh that’s fantastic’ but it’s a significant step down from our Fund IV.”
In India, a surge in public markets has inflated founder and investor expectations, slowing investment flow. Deals that should’ve been eight to 10 times enterprise value to Ebitda are now 10 to 12 times, said Siguler Guff & Co. co-head of emerging markets Shaun Khubchandani.
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All Asian markets — except Japan, Australia and New Zealand — saw double-digit declines in deal value during the first half of 2025 from a year earlier, according to Bain & Co. Southeast Asia was hit hardest, with a 35% drop.
Looking ahead
Private equity firms have been echoing what LPs want to hear, highlighting asset sales, regional reach, and a focus on buyouts over minority stakes. Deal volume could pick up in the second half, which in turn should accelerate funding from next year, Bain & Co senior partner Kiki Yang said.
Asset allocators are growing more assertive in defining their expectations. Edward Grefenstette, CEO of the Dietrich Foundation, has cautioned fund managers against prematurely offloading quality companies just to raise cash. Meanwhile, Singapore’s sovereign wealth fund GIC is urging its funds to establish “exit committees” focused on timing deal and fund exits.
“In the past we would expect 15-20% of the market value of a set of funds distributed every year,” said Ankur Meattle, GIC’s private equity head of funds & co-investments, Asia. “That’s come down across the board and that’s what we need to bring back some focus to.”
Some are still trying to push through. BlueFive Capital founder Hazem Ben-Gacem said he’s hunting for good companies regardless.
“I’ll spend as much time in Beijing to look for new deals as I will in Austin, in Seattle and in LA,” he said. “Investors will have to make up their mind if this is a platform they’re comfortable with.”
