Dechert Global Private Equity Outlook shows APAC confidence rising despite global headwinds

Asia Pacific (APAC) private equity (PE) executives project higher returns and show reduced geopolitical concerns as market momentum builds.

Dechert LLP released its eighth annual Global Private Equity Outlook, produced in partnership with Mergermarket. The report highlights strong year-on-year growth in buyout and exit values, which is strengthening general partners’ (GPs) confidence in private equity performance over the next 12 months, despite evolving U.S. trade policies, political uncertainty across major European markets, and a complex geopolitical backdrop.

As the industry looks ahead into 2026, the report underscores how GPs are navigating this environment with more flexible capital solutions, sharper sector focus and proactive liquidity strategies, signaling a market that continues to adapt and strengthen despite persistent external headwinds.

APAC PE executives stood out for their notably upbeat sentiment as global private equity markets gradually thaw. Key areas where APAC diverged from global peers include:

Lower geopolitical anxiety: Only 30% of APAC respondents cite geopolitical conflict as the top threat to dealmaking, compared with 49% globally and 65% in EMEA.

Higher expected returns: APAC executives forecast 17.4% returns for 2025, slightly ahead of the 17.1% estimate from North American and EMEA respondents – also reflecting more optimism about the returns outlook for the industry than a year ago.

Greater structural innovation: 60% of APAC firms favour earnout structures to bridge valuation gaps, significantly above the 48% global average.

Sector momentum: Industrials and chemicals have been a standout performer in APAC during the first three quarters of 2025.

Macroeconomic considerations: Weak economic growth is expected to have the most significant headwind on the deal environment over the next 12-18 months.

Reflections on 2025

APAC deal volumes declined 5.2% in the first three quarters of 2025 versus the same period in 2024, as GPs paused to review the impact of U.S. tariff policy shifts on export driven businesses across the region.

Across APAC, market priorities varied widely. Japan continues to emphasise corporate carve-outs and succession planning; India’s focus spans financial services, digital infrastructure, healthcare and energy transition; China is prioritizing data and cybersecurity; while the Philippines and Indonesia have both implemented policies designed to attract greater foreign investment.

2026 Outlook: Capital flows in focus

APAC dealmakers expect exits to remain a top priority in 2026 as they work to accelerate distributions and drive liquidity across channels.

Across the region, there has been a drive within the GP community to align more closely with LPs. APAC leads co-investment adoption at 60%, up from 40% a year ago, leveraging the region's sophisticated sovereign wealth fund ecosystem.

Further optimism is cited around the potential of opening up PE to the retail investor. This is especially high in Asia, with more than a third of APAC based respondents expecting more than 25% of their next funding to come from a retail investor base.

Maria Tan Pedersen, co-head of emerging markets, partner, M&A/Private Equity at Dechert LLP commented: “We’re witnessing an interesting shift in the APAC PE landscape. The market has demonstrated resilience and adaptability in the face of challenges, and we’re now seeing a surge in appetite to pursue previously untapped opportunities with sophisticated structuring solutions. A wave of change across corporates and family-owned businesses will spur carve-outs, family sell downs and succession solutions, driving strong deal momentum into 2026 and beyond.”

The report identifies several global trends shaping the industry landscape:

GP-led secondaries: 46% of respondents are using GP-led secondaries or continuation vehicles (CV) to facilitate distributions on paid-in capital (DPI) for existing LPs and mitigate potential fundraising challenges in the absence of traditional asset selloffs – almost double the number of respondents than in last year’s survey.

GP-stake divestitures: 77% of survey participants plan to make a GP-stake divestiture in the next 24 months - double the proportion that had plans to a year ago.

Antitrust scrutiny: 47% expect increased “politicisation” of merger control enforcement.

Democratisation of PE: 73% of respondents expect at least 10% of their next funding to come from retail investors.

Private credit: 57% of GPs are turning to private credit, mainly for refinancing and recapitalisation.

Fund finance: 36% of respondents expect fund finance to increase in 2026, compared to only 2% anticipating such an increase the prior year.

Co-Investment: 52% of respondents have a co-investment program, with 51% offering LPs co-investment opportunities in private credit loans secured by portfolio companies.

Re-disseminated by Wealth and Society