Private Equity Secondaries: A Comparative Analysis on the US and Chinese Markets

Abstract

Since its inception in the early 2000s, China's private equity secondary market has evolved dramatically. Despite its fast growth, exit strategies in China’s private equity market lag, especially as tighter IPO regulations complicate exits, undermining liquidity and returns. In contrast, the U.S. benefits from a robust secondary market, underscoring its critical role in the maturity of the private equity industry. This thesis employs a mixed-methods approach to explore the U.S. private equity secondary market's evolution and to assess the status and challenges of China's private equity secondary market. The U.S. market enjoys a well-established regulatory environment, professional intermediaries, and advanced trading platforms, contributing to its efficiency and liquidity. Conversely, China's market, despite its growth, grapples with regulatory insufficiencies, professional gaps, and opaque transactions. Enhancements to China's legal framework, professional services, and trading platform functionalities are proposed to foster market development and global integration, aiming to enrich both academic discourse and provide practical guidance for stakeholders.