At this year’s SuperReturn Asia, one of the private equity (PE) calendar’s flagship events, attendees were asked two questions. First, if they had made fresh commitments to new funds or companies in the past two years. Second, if they planned to do so in the next couple of years.

Across the cavernous Marina Bay Sands convention centre, a single arm was raised for both questions.

Gunther Hamm, president of Chinese asset manager Hopu Investment Management, responded on stage: “We all know, based on that show of hands, that fundraising last year was 10 per cent of what it was in 2021.”

The harsh capital winter is felt especially in China. While the Asian giant represented more than half of all Asia-Pacific deal value in 2020, that share fell to 27 per cent in 2024, according to Bain & Company. Greater China posted the biggest decline in exit value and count, down 65 per cent and more than 40 per cent year on year respectively, while IPO exit value was down 70 per cent.

As geopolitical tensions mount and domestic regulatory shifts tighten, the once-roaring engine of Chinese PE is sputtering. Exit opportunities are diminishing and fundraising is in retreat. Chinese PE firms have been facing a barren landscape for some time now and many of them are looking overseas for new projects and ideas. They are turning to Southeast Asia and Singapore, with names like Hillhouse, Primavera, Boyu and FountainVest setting up offices here. The Lion City could offer something priceless in a low-price, low-value time.

Recognition and Support for Foreign Proceedings

Two things are in Singapore’s favour. First, a fast-changing regulatory landscape.

The evolving complexity of cross-border activity demands more stringent standards in deal-making and restructuring. This extends to providing a framework to recognise and support foreign proceedings as well, in some cases under Chinese insolvency law.

Earlier this year, Singapore’s insolvency regime was able to recognise China Bankruptcy Reorganisation Proceedings, in one of the first few applications for recognition and reliefs under the UNCITRAL Model Law of Cross-Border Insolvency (“Model Law”). Companies belonging to Delong Group, a Chinese stainless steel firm, were the subject of the applications after questionable transactions involving their assets in Singapore.

Singapore adopted the Model Law in 2017, giving a clear framework for recognising foreign insolvency proceedings and spelling out the effects of recognition. For example, Singapore courts’ requirements to recognise judgments of foreign courts have been clarified to include solvent restructurings or voluntary liquidations, so long as they involve adjustment of debt. This means that investors will have more clarity if their investments go south or need restructuring.

The case of Ascentra Holdings in 2023 is another good example. Shareholders had resolved to wind up the health and beauty product company, and voluntary winding-up proceedings had commenced in the Cayman Islands. Liquidators succeeded in having the liquidation in Cayman Islands recognised in Singapore, which meant that they could pursue claims against SPGK Pte Ltd, a Singapore-incorporated company. The Ascentra episode showed that even solvent voluntary liquidations qualify as “foreign proceedings” under the Model Law, which would give foreign investors some peace of mind.

Two other areas could also position the Republic as a strategic choice for preserving value.

First, schemes of arrangement and moratoria. A scheme of arrangement allows companies to reach binding agreements with creditors, often across multiple classes, while staying operational. Coupled with moratorium provisions, these tools give companies breathing space from enforcement actions and creditor pressure.

Second, rescue financing provisions. This means that new money injected into a distressed company, whether from existing shareholders, strategic investors, or lenders, can be given priority ranking above existing creditors.

The Singapore legal infrastructure is well-equipped for all-weather resistance, however the markets fluctuate – something that the Chinese PE firms will no doubt explore.

The First Signs of Spring?

The second factor in Singapore’s favour is the continued bright spark of Southeast Asia, in which the Republic plays a key role as convenor and facilitator of PE deals. The Republic secured nearly half of the region’s US$16 billion (S$20.8 billion) capital investment in 2024, along with 60 of the 98 transactions.

With China’s sovereign wealth fund CIC pondering whether to pull the plug on American funds, there is little doubt that Chinese investors are actively considering other markets amid US-China tensions. The intense rivalry is likely to remain, even as President Donald Trump hailed an “amazing” meeting with President Xi Jinping in South Korea om the sidelines of the recent Asia-Pacific Economic Cooperation summit.

A key beneficiary is likely to be Southeast Asia, with reports stating that Chinese funds worth over US$1 billion (S$1.3 billion) could be pumped into the region.

Sectors like real estate and biotech, which are drawing keen Chinese interest, could power this recovery. The activity of China investment firms like Hillhouse in Singapore also bodes well. It acquired business advisory InCorp in 2024 before vying for traditional Chinese medicine chain Eu Yan Seng.

For Chinese private equity firms recalibrating their global strategies, Singapore offers not just capital efficiency but legal certainty. It is a jurisdiction where cross-border restructuring and investor protection are built into the rule of law. In a low-growth world, that kind of certainty is priceless.