Market action in 2025 was very much in public equities, with Wall Street stock indices ending the year near record highs and Japan’s Nikkei average bursting through 50,000 for the first time ever.
Less noticed was the fact that private equity and other forms of private market activity also accelerated sharply, not least in Asia.
Data from asset servicing firm Ocorian shows that the global value of private assets held in funds jumped by around 10% to an all-time high of more than US$14 trillion last year. It forecasts the value to reach nearly $24 trillion within five years, with private equity almost doubling to $17.4 trillion.
This is still dwarfed by the $127 trillion total capitalisation of global stock markets. But public equity markets are increasingly seen as being in or approaching a boom or bubble phase, especially in the technology and artificial intelligence sectors, and hence subject to a correction, whereas private markets are in a more stable phase of their evolution.
Analysts expect private market activity in Asia to expand more rapidly in 2026 and beyond – provided overall market sentiment remains firm and the interest rate environment is benign – given the region’s high number of family-owned companies, many of which are now looking more favourably on private equity.
“Japan in the last few years has definitely been the hottest private equity market in Asia and I think that trend will continue,” Mingchen Xia, managing director and co-head of Asia investments at Hamilton Lane, a global private markets investor, is quoted as saying in a recent report in Nikkei Asia.
Changing mindsets
According to a July 2025 study by consultants Russell Reynolds Associates, many family-owned businesses in Asia have historically been reluctant to accept funding from private equity investors who were viewed as being more interested in making a quick profit than improving a company’s long-term performance.
But several factors, including lack of successors, are now prompting family businesses to explore funding through the sale of minority or even majority stakes.
“Bringing in the right private equity partner allows family firms to ensure business continuity and institutionalisation to facilitate sustained growth,” the study says
Another factor driving the change is the search by family businesses for financial partners to invest in new asset classes or new economy businesses that are complementary or additive to their existing operations.
“Private equity involvement is an especially attractive option for growth if family businesses want to avoid the complexities of going public, which include managing more stakeholders and reduced flexibility to be agile in the business environment,” according to the study.
Another catalyst is reforms led by the Tokyo Stock Exchange, which is pushing listed companies to improve their capital efficiency, and more businesses looking to offload their non-core assets.
“Undervalued companies also face pressure to go private. So, there are a lot of tailwinds for buyout investments in Japan,” the Nikkei Asia report says.
A recent survey by data provider Preqin found that more than 80% of Japanese investors showed an intention to either maintain or increase their allocations across all private market asset classes, with many seeking higher returns, a reliable income stream and diversification.
