Insights

2026 Asia-Pacific PE Investment Trends and Opportunities

TL;DR

At a headline level, the APAC PE market looks like it's correcting — but underneath, a different story is unfolding. Fundraising hit a five-year high, and Japan and Korea are rapidly filling the void left by China. Korea in particular is emerging as a new focus market for global PE, creating favorable conditions for owner-operators in the mid-market.

Building the floor — signals beyond the numbers

Headline numbers from H1 2025 in the Asia-Pacific PE market are uninspiring. Investment volume came in at USD 64.3 billion, down 28% year-on-year and the lowest level since 2019, and deal count has been declining for four consecutive years.

Look beyond the surface, however, and the tone is different. Deal count rebounded 4% versus the prior half, signaling a market re-entry. Even more telling is fundraising. APAC fund formation in 2024 reached USD 233.4 billion — a five-year high — and H1 2025 added another USD 95.4 billion, continuing the streak. Investor capital is already moving into the market. The question now is where it heads.

Who is filling China's gap?

The biggest shift in the APAC PE landscape is China's contraction. Compounded by geopolitical and regulatory risk, China PE investment plunged to USD 17.7 billion in H1 2025 — the lowest since 2019.

Japan is filling the gap fastest. After overtaking China in deal value for the first time in H2 2024, Japan sustained steady investment of USD 14 billion in H1 2025. A stable macro environment and an increasingly PE-open corporate culture are the backdrop. India is also reasserting its presence with a strong recovery of 457 deals and USD 13.7 billion in H1 2025.

Why global PE is taking another look at Korea

One section of the report stands out: a noticeably more positive view of Korea.

The report describes Korea as a mature market that combines a sophisticated technology ecosystem (AI, semiconductors, EV supply chains), a stable rule of law, and a robust domestic market. While US tariffs caused short-term disruption to some export industries, the report argues that, over the long term, a strategic window is opening for assets that are undervalued relative to strong fundamentals.

In particular, global funds' activity in Korea is expected to intensify around chaebol carve-out deals and non-core divestitures. From an owner's perspective considering a sale, this means the pool of potential acquirers is materially widening.

Where the money is going — sectors and deal size

By sector, TMT (technology, media, and telecom) remains the leader, accounting for 47% of deal count and 31% of value, as AI and digital transformation entrench themselves as the core engines of value creation. Healthcare and manufacturing/transportation continue to attract steady capital.

By deal size, the rise of the mid-market is striking. Mid-market deals (USD 15 million–500 million) jumped from 32% of deals in H2 2024 to 45% in H1 2025. PE investors now see mid-market as the best “value for money” bracket — flexible enough to navigate market change while still large enough to execute operational improvements and growth strategies.

Exit market: trade sales over IPOs

With IPO windows remaining largely shut, exit strategies are diversifying. In H1 2025, trade sales (sales to strategic investors) accounted for 57% of exit count and 59% of value, effectively becoming the main route. PE secondary exits captured 25% of count and 30% of value as a credible alternative, and continuation vehicles are gaining ground as a tool to manage exit timing.

KPMG Insight

Even mid-correction, the APAC PE market is accumulating capital, and structural opportunities are widening around Japan, Korea, and India. Mid-market-centric capital flows suggest that now is a sufficiently attractive window for prepared owner-operators in Korea.