💼 Private Equity Faces Liquidity Crunch as Valuation Gaps Deepen, Say Asset Owners

Private equity (PE) is under intensifying scrutiny from sophisticated asset owners grappling with slowing distributions, valuation concerns and tightening liquidity, according to MSCI.

Ashley Lester, MSCI’s chief research and development officer, said distributions from PE funds have tumbled from the “low-20 per cent” range between 2022 and 2024 to just 7 per cent in the first quarter of this year. “That makes liquidity questions much more pressing and also raises questions about the valuation of those companies,” he told The Business Times.

Exits and leverage squeeze

Funds are also contending with a leverage squeeze, as buyouts financed through higher debt loads face steep coupon costs, challenging their ability to cover interest expenses. Exits, which typically correlate with stock market performance, have stalled despite buoyant equity markets — a divergence Lester attributes partly to returns being concentrated in a few mega-cap names, such as the US technology giants. “With the exception of a couple of private companies like OpenAI, most private companies are not in the mega-cap range,” he said.

More worrying, he noted, is the inversion of the traditional PE model. Historically, sold assets commanded higher valuation multiples than those held in portfolios. Since 2022, however, exited assets have fetched lower multiples — by 0.5 to 1.1 times — raising doubts about the resilience of valuations on books. “It looks like the small number of companies GPs are selling are very much their best companies,” said Lester.

MSCI vice-president Abdulla Zaid echoed the concerns, noting that held assets face contracting profitability and rising leverage. “These conditions not only signal deeper valuation risks for future exits but also raise questions about the underlying sources of value creation amid downward pressure on valuation multiples,” he wrote in a research blog.

Paper gains, limited cash

Despite these headwinds, MSCI’s global closed-end fund indexes showed PE delivering a 4.2 per cent return in Q2 2025 — its strongest since 2021. But the firm cautioned: “With exit activity still limited, translating paper gains into actual distributions continues to be the key challenge for investors.”

Continuation funds under scrutiny

Meanwhile, continuation funds and secondaries have surged in popularity, as general partners seek fresh capital and limited partners rebalance portfolios. But questions about quality remain.

Adeline Tan, partner and head of investments (Asia) at Mercer, said her firm is fielding a flood of pitches. “Some corporate pensions hit de-risking triggers when interest rates rose and decided they didn’t need so much private markets exposure. Some are now looking to sell — and they come to Mercer for help,” she said.

Still, Tan warned that continuation funds can be “a little bit of a refinancing play, rather than a pure PE investment”. She cautioned that investors risk buying into stranded assets: “Sometimes things sound too good to be true. You could be buying into a portfolio that may still yield income, but its life may be finite.”

Fundraising challenges ahead

A mid-year 2025 report by Bain & Company underlined the scale of the challenge. With buyout fundraising under pressure, recovery may not come until 2026 or later. More than 18,000 private capital funds are chasing US$3.3 trillion in commitments — or roughly US$3 of demand for every US$1 of supply.

Whether private wealth flows can narrow that mismatch remains uncertain. For now, asset owners and fund managers alike face a stark reality: liquidity is scarce, valuations are questioned, and the pressure to exit is only mounting.

🏢 Reit Market Heats Up: CapitaLand’s Shanghai Listing, Centurion’s Debut and a Sector in Transition

Following the strong debut of Centurion Accommodation Reit (CA-Reit) on the Singapore Exchange last week, investor attention is shifting to Shanghai, where CapitaLand Commercial C-Reit (CLCR) is set to begin trading. The listing could have far-reaching implications for CapitaLand China Trust (CLCT), which seeded CLCR with a shopping mall and holds a 5 per cent stake.

If CLCR secures a strong market valuation, analysts say CLCT may be able to tap China’s domestic capital market to unlock mature retail assets, potentially boosting the valuation of its SGX-listed units, which closed last week at S$0.785 — a 24.5 per cent discount to net asset value.

CLCR also extends CapitaLand Investment’s (CLI) listed funds platform to four markets: Singapore, Malaysia, Japan and China. The Reit’s IPO drew overwhelming demand, with the bookbuilding tranche 254.5 times covered and the public tranche 535.2 times subscribed. The 400 million units priced at 5.718 yuan each raised 2.29 billion yuan (S$409 million), above earlier estimates.

Centurion’s strong start

The upbeat tone follows CA-Reit’s Sep 25 debut on the SGX. Units in the worker and student housing-focused trust ended at S$0.96, nearly 9.1 per cent above its IPO price of S$0.88. The offering raised S$771.1 million, with cornerstone investors taking more than 614 million units. CA-Reit’s initial portfolio of assets in Singapore, Australia and the UK is valued at about S$1.84 billion.

Meanwhile, NTT DC Reit, which listed in July, has recovered from a weak start. After slipping below its IPO price of US$1 to a low of US$0.93 in August, it has since rebounded to close last week at US$1.00. The data centre-focused trust, with assets worth US$1.6 billion, is projected to deliver a 7.8 per cent yield for the year ending March 2027.

Sector shake-ups

Despite new listings, the S-Reit sector is undergoing consolidation. Paragon Reit and Frasers Hospitality Trust have both been taken private this year amid challenging conditions. Meanwhile, sponsor realignments have driven changes at Stoneweg European Stapled Trust, formerly Cromwell European Reit, and Acrophyte Hospitality Trust, previously ARA US Hospitality Trust.

Acrophyte’s manager recently warned of potentially heavy renovation costs of US$100 million between 2025 and 2027 to meet brand standards, raising questions over funding options. Its units last closed at US$0.29 — a steep 58.6 per cent discount to NAV.

Pressure building

While investor appetite for alternative assets such as data centres and accommodation is evident, traditional retail and hospitality Reits face headwinds. Over five years to Sep 19, the iEdge S-Reit Index gained just 6.8 per cent, versus a 115.9 per cent return for the Straits Times Index. This year, S-Reits have recovered somewhat, rising 13.4 per cent against the STI’s 18.5 per cent.

Analysts note that unitholders could soon press weaker S-Reits to adopt “value-up” strategies to unlock portfolio value. With CLCR’s entry onto Shanghai’s bourse, CLI may have just set a higher benchmark for the sector.

📉 China’s Venture Capital Market Mirrors Gold’s Dark Days, but Glimmers of Hope Remain

“No one likes to talk about a falling market.” That sentiment, once tied to gold’s plunge to US$250 an ounce in 2001, is now echoing through China’s venture capital (VC) scene. Once a magnet for investors, the market has been shrinking steadily since 2021 — and 2025 has been no exception.

According to GlobalData, VC funding in China fell 36 per cent between January and August this year from the same period in 2024, slashing the country’s share of the global market to just 7 per cent, half of last year’s 14 per cent. Lead analyst Aurojyoti Bose said the steep decline reflects a slowdown in large-ticket rounds amid macroeconomic uncertainty, regulatory pressure and geopolitical tensions.

KPMG data in July put second-quarter VC deal value at US$4.7 billion — China’s lowest in more than a decade. While global VC activity has begun to recover, China has bucked the trend, weighed down further by the US Outbound Investment Rules restricting American capital from flowing into Chinese sectors such as semiconductors, artificial intelligence (AI) and quantum technology.

“These rules have reduced US participation in China’s sensitive technology sectors, shrinking the capital pool available for large investment rounds,” said Amy Yin, partner at Reed Smith.

The fallout is visible across the market. Popular pre-IPO and consumer deals from just five years ago have “suddenly disappeared,” one market player observed, as investors redirect funds to Japan, India, Australia and South Korea.

At a recent Singapore VC conference, a panel on Greater China drew sparse attendance, while a session on Japan was packed. “Few want to talk about China’s VC market,” one participant admitted.

State steps in

Beijing has tried to fill the gap. In March, the government announced a national VC guidance fund aimed at raising one trillion yuan (S$181.3 billion) over 20 years, spurring activity in yuan-denominated funds. But reliance on state-driven capital poses challenges for private-sector fund managers, cautioned Jay Tai, partner at Stephenson Harwood.

Nonetheless, areas of growth remain. China’s deep-tech sector has shown promise, particularly after AI firm DeepSeek impressed global markets by rivalling America’s ChatGPT. Investment flows are also trickling into robotics and cloud technology.

Hong Kong listings bring relief

IPO activity in Hong Kong has provided some optimism. Share sales — including IPOs, placements and block trades — raised US$51 billion from January to mid-September, according to Bloomberg, putting the city on track for a four-year high. Many of these listings have been led by Chinese companies, offering vital exit opportunities for venture-backed firms.

“Now with Hong Kong listings becoming active, we expect such exits to help activate the VC market again in China,” said Tai.

Sean Low, chief executive of Singapore-based Golden Vision Capital and former senior vice-president at GIC, remains optimistic. His firm continues to back Chinese advanced manufacturing, betting on exit opportunities in three to five years. “China should not be overlooked, as all market cycles turn,” he said.

Cautious outlook

Despite China’s US$2.7 trillion equity rally this year helping to shed the “uninvestable” label from its stock markets, uncertainty still clouds its VC space. Yin of Reed Smith warned: “There is still no clear forecast of the exact timing of a market bottom. Stabilisation will depend on government support translating into deal flow, an improved economic outlook, and easing of US-China tensions.”

For now, China’s venture capital sector finds itself in the shadows, hoping, like gold two decades ago, to one day reclaim its shine.

📈 IPO Wave Spurs Investor Relations Firms to Hire, But Skills Trump Headcount

Investor relations (IR) agencies in Singapore are gearing up for expansion as IPO activity and capital-raising momentum strengthen, with demand increasingly focused on specialised expertise.

Gem Comm chief executive officer Emily Choo said the firm has entered a “strategic growth phase” to meet rising client needs. Its headcount grew by about 20% in the past year, including hires for client-facing and advisory roles. Earlier this year, Gem Comm advised on Catalist listings of Dezign Format and Lum Chang Creations.

Financial PR is also adding staff. Managing director Kamal Samuel said the firm will increase its team by 15% to 20%, citing stronger market sentiment and a healthy deal pipeline. He stressed financial knowledge and interpersonal skills as critical hiring criteria.

Others are taking a more cautious stance. August Consulting managing partner Alan Lee said his firm is not actively hiring but remains open to expansion next year. August Consulting recently advised on the mainboard listing of Info-Tech Systems. Lee emphasised that the team is currently “adequately resourced” to manage existing and new mandates.

Beyond numbers, agencies are sharpening focus on skills. Choo said IR professionals must now demonstrate financial acumen, ESG advisory expertise, digital marketing and data analytics. “The role has evolved far beyond press releases and logistics,” she said. Samuel echoed the view, highlighting the importance of convincing communication with seasoned analysts and investors.

Agencies say demand has been fuelled by initiatives from the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX), including the Equity Market Development Programme, which have boosted liquidity and research coverage. Lee observed a “re-energised” market, with investors increasingly open to small- and mid-cap names if they show growth potential and good governance.

SAC Capital chief executive Ong Hwee Li pointed to the strong first-day performances of recent IPOs as evidence of robust investor appetite. He said many investors who missed out are now looking for upcoming quality listings, with more companies engaging IR agencies to strengthen post-listing programmes.

Choo reported a 30% to 40% increase in inbound requests from small and mid-cap firms, especially in oil and gas, offshore and marine, and consumer sectors. Samuel added that interest has been building for over a year, with returning clients and spin-offs from groups such as Centurion and Yangzijiang Financial seeking renewed visibility.

Still, not all agree momentum is uniform. One unnamed IR consultant said his firm has not seen a rise in inbound queries, suggesting that it is “too early to tell” if new measures will bring sustained investor interest.

📊 Debate Erupts Over SGX’s New iEdge Singapore Next 50 Indices: Liquidity vs. True Value

The Singapore Exchange’s launch of the iEdge Singapore Next 50 Indices has drawn sharp criticism from sections of the investment community.
While the initiative aims to raise the visibility of mid-cap stocks beyond the Straits Times Index (STI), critics argue that the methodology gives too much weight to liquidity factors such as daily turnover and free float — at the expense of genuine investability.

Observers contend that index inclusion should not be awarded purely on the basis of market capitalisation or trading activity. Instead, it should be earned through strong corporate governance, performance, and fundamentals.
“An index prioritising liquidity risks becoming a mere reflection of trading activity, rather than a driver of corporate value,” one market watcher said.

The debate touches on a long-standing issue — Singapore’s persistent valuation discount. Critics say benchmarks should incentivise better capital allocation and stronger governance, rather than simply reward stocks that trade frequently.
They point to South Korea’s Korea Value Up Index as a model. That benchmark was designed under the Corporate Value-up Program and selects companies based on key measures such as price-to-book (P/B) ratios, return on equity (ROE), and shareholder-friendly actions like dividends and buybacks.

Supporters of such a model argue it creates a “positive feedback loop,” giving management clear, measurable targets. Companies can strive to improve P/B and ROE in order to qualify, while shareholders gain a stronger basis to hold boards accountable.

In contrast, critics argue that the liquidity-heavy design of the new iEdge indices offers little incentive for reform or long-term value creation.
They have urged SGX to complement the indices with an investability-focused benchmark that encourages companies to enhance governance and fundamentals — a move they say would truly unlock sustainable value for long-term investors.

💼 Private Equity Faces Liquidity Crunch as Valuation Gaps Deepen, Say Asset Owners

Private equity (PE) is under intensifying scrutiny from sophisticated asset owners grappling with slowing distributions, valuation concerns and tightening liquidity, according to MSCI.

Ashley Lester, MSCI’s chief research and development officer, said distributions from PE funds have tumbled from the “low-20 per cent” range between 2022 and 2024 to just 7 per cent in the first quarter of this year. “That makes liquidity questions much more pressing and also raises questions about the valuation of those companies,” he told The Business Times.

Exits and leverage squeeze

Funds are also contending with a leverage squeeze, as buyouts financed through higher debt loads face steep coupon costs, challenging their ability to cover interest expenses. Exits, which typically correlate with stock market performance, have stalled despite buoyant equity markets — a divergence Lester attributes partly to returns being concentrated in a few mega-cap names, such as the US technology giants. “With the exception of a couple of private companies like OpenAI, most private companies are not in the mega-cap range,” he said.

More worrying, he noted, is the inversion of the traditional PE model. Historically, sold assets commanded higher valuation multiples than those held in portfolios. Since 2022, however, exited assets have fetched lower multiples — by 0.5 to 1.1 times — raising doubts about the resilience of valuations on books. “It looks like the small number of companies GPs are selling are very much their best companies,” said Lester.

MSCI vice-president Abdulla Zaid echoed the concerns, noting that held assets face contracting profitability and rising leverage. “These conditions not only signal deeper valuation risks for future exits but also raise questions about the underlying sources of value creation amid downward pressure on valuation multiples,” he wrote in a research blog.

Paper gains, limited cash

Despite these headwinds, MSCI’s global closed-end fund indexes showed PE delivering a 4.2 per cent return in Q2 2025 — its strongest since 2021. But the firm cautioned: “With exit activity still limited, translating paper gains into actual distributions continues to be the key challenge for investors.”

Continuation funds under scrutiny

Meanwhile, continuation funds and secondaries have surged in popularity, as general partners seek fresh capital and limited partners rebalance portfolios. But questions about quality remain.

Adeline Tan, partner and head of investments (Asia) at Mercer, said her firm is fielding a flood of pitches. “Some corporate pensions hit de-risking triggers when interest rates rose and decided they didn’t need so much private markets exposure. Some are now looking to sell — and they come to Mercer for help,” she said.

Still, Tan warned that continuation funds can be “a little bit of a refinancing play, rather than a pure PE investment”. She cautioned that investors risk buying into stranded assets: “Sometimes things sound too good to be true. You could be buying into a portfolio that may still yield income, but its life may be finite.”

Fundraising challenges ahead

A mid-year 2025 report by Bain & Company underlined the scale of the challenge. With buyout fundraising under pressure, recovery may not come until 2026 or later. More than 18,000 private capital funds are chasing US$3.3 trillion in commitments — or roughly US$3 of demand for every US$1 of supply.

Whether private wealth flows can narrow that mismatch remains uncertain. For now, asset owners and fund managers alike face a stark reality: liquidity is scarce, valuations are questioned, and the pressure to exit is only mounting.

📉 China’s Venture Capital Market Mirrors Gold’s Dark Days, but Glimmers of Hope Remain

“No one likes to talk about a falling market.” That sentiment, once tied to gold’s plunge to US$250 an ounce in 2001, is now echoing through China’s venture capital (VC) scene. Once a magnet for investors, the market has been shrinking steadily since 2021 — and 2025 has been no exception.

According to GlobalData, VC funding in China fell 36 per cent between January and August this year from the same period in 2024, slashing the country’s share of the global market to just 7 per cent, half of last year’s 14 per cent. Lead analyst Aurojyoti Bose said the steep decline reflects a slowdown in large-ticket rounds amid macroeconomic uncertainty, regulatory pressure and geopolitical tensions.

KPMG data in July put second-quarter VC deal value at US$4.7 billion — China’s lowest in more than a decade. While global VC activity has begun to recover, China has bucked the trend, weighed down further by the US Outbound Investment Rules restricting American capital from flowing into Chinese sectors such as semiconductors, artificial intelligence (AI) and quantum technology.

“These rules have reduced US participation in China’s sensitive technology sectors, shrinking the capital pool available for large investment rounds,” said Amy Yin, partner at Reed Smith.

The fallout is visible across the market. Popular pre-IPO and consumer deals from just five years ago have “suddenly disappeared,” one market player observed, as investors redirect funds to Japan, India, Australia and South Korea.

At a recent Singapore VC conference, a panel on Greater China drew sparse attendance, while a session on Japan was packed. “Few want to talk about China’s VC market,” one participant admitted.

State steps in

Beijing has tried to fill the gap. In March, the government announced a national VC guidance fund aimed at raising one trillion yuan (S$181.3 billion) over 20 years, spurring activity in yuan-denominated funds. But reliance on state-driven capital poses challenges for private-sector fund managers, cautioned Jay Tai, partner at Stephenson Harwood.

Nonetheless, areas of growth remain. China’s deep-tech sector has shown promise, particularly after AI firm DeepSeek impressed global markets by rivalling America’s ChatGPT. Investment flows are also trickling into robotics and cloud technology.

Hong Kong listings bring relief

IPO activity in Hong Kong has provided some optimism. Share sales — including IPOs, placements and block trades — raised US$51 billion from January to mid-September, according to Bloomberg, putting the city on track for a four-year high. Many of these listings have been led by Chinese companies, offering vital exit opportunities for venture-backed firms.

“Now with Hong Kong listings becoming active, we expect such exits to help activate the VC market again in China,” said Tai.

Sean Low, chief executive of Singapore-based Golden Vision Capital and former senior vice-president at GIC, remains optimistic. His firm continues to back Chinese advanced manufacturing, betting on exit opportunities in three to five years. “China should not be overlooked, as all market cycles turn,” he said.

Cautious outlook

Despite China’s US$2.7 trillion equity rally this year helping to shed the “uninvestable” label from its stock markets, uncertainty still clouds its VC space. Yin of Reed Smith warned: “There is still no clear forecast of the exact timing of a market bottom. Stabilisation will depend on government support translating into deal flow, an improved economic outlook, and easing of US-China tensions.”

For now, China’s venture capital sector finds itself in the shadows, hoping, like gold two decades ago, to one day reclaim its shine.

📈 IPO Wave Spurs Investor Relations Firms to Hire, But Skills Trump Headcount

Investor relations (IR) agencies in Singapore are gearing up for expansion as IPO activity and capital-raising momentum strengthen, with demand increasingly focused on specialised expertise.

Gem Comm chief executive officer Emily Choo said the firm has entered a “strategic growth phase” to meet rising client needs. Its headcount grew by about 20% in the past year, including hires for client-facing and advisory roles. Earlier this year, Gem Comm advised on Catalist listings of Dezign Format and Lum Chang Creations.

Financial PR is also adding staff. Managing director Kamal Samuel said the firm will increase its team by 15% to 20%, citing stronger market sentiment and a healthy deal pipeline. He stressed financial knowledge and interpersonal skills as critical hiring criteria.

Others are taking a more cautious stance. August Consulting managing partner Alan Lee said his firm is not actively hiring but remains open to expansion next year. August Consulting recently advised on the mainboard listing of Info-Tech Systems. Lee emphasised that the team is currently “adequately resourced” to manage existing and new mandates.

Beyond numbers, agencies are sharpening focus on skills. Choo said IR professionals must now demonstrate financial acumen, ESG advisory expertise, digital marketing and data analytics. “The role has evolved far beyond press releases and logistics,” she said. Samuel echoed the view, highlighting the importance of convincing communication with seasoned analysts and investors.

Agencies say demand has been fuelled by initiatives from the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX), including the Equity Market Development Programme, which have boosted liquidity and research coverage. Lee observed a “re-energised” market, with investors increasingly open to small- and mid-cap names if they show growth potential and good governance.

SAC Capital chief executive Ong Hwee Li pointed to the strong first-day performances of recent IPOs as evidence of robust investor appetite. He said many investors who missed out are now looking for upcoming quality listings, with more companies engaging IR agencies to strengthen post-listing programmes.

Choo reported a 30% to 40% increase in inbound requests from small and mid-cap firms, especially in oil and gas, offshore and marine, and consumer sectors. Samuel added that interest has been building for over a year, with returning clients and spin-offs from groups such as Centurion and Yangzijiang Financial seeking renewed visibility.

Still, not all agree momentum is uniform. One unnamed IR consultant said his firm has not seen a rise in inbound queries, suggesting that it is “too early to tell” if new measures will bring sustained investor interest.

Thank you