Investment analysts struck an optimistic tone on the outlook for Hong Kong’s private equity market, betting on sustained momentum in the city’s buoyant public market and business activity to spill over into the private sphere.

“We have seen a very strong recovery of the public markets in Hong Kong and the Chinese mainland,” Xia Mingchen, co-head of Asia investments at global private markets firm Hamilton Lane, said on Tuesday.

“If this trend continues, those outperformances will translate to the private markets in the next few quarters,” the investment veteran added, pointing to expectations of stronger private equity fund performance and a pickup in capital deployment.

In the first 10 months of this year, Hong Kong raised HK$507 billion ($65.2 billion) in total funds, surging 228 percent compared with the same period last year, according to figures released by Hong Kong Exchanges and Clearing Ltd. Meanwhile, the number of newly listed initial public offerings in the special administrative region rose 50 percent to 81 during the period.  

Xia said Hong Kong’s robust IPO activity offers a “very promising” exit environment for private equity funds.

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The city’s rising status as a gateway for mainland businesses going global is creating fresh opportunities for the private market, with more general partners setting up offices in Hong Kong to help portfolio companies access capital markets and expand overseas, he added.

Jean Eric Salata, chairperson of private equity manager EQT Asia, expressed optimism about China and the SAR’s performance, noting that Asia — particularly Hong Kong and the mainland — stands to be one of the “big beneficiaries” as global investors seek diversification and rebalance their portfolios.

He pointed to China’s efforts to bolster investment in technology and artificial intelligence, as well as consumption. “I’m actually bullish on China — and very bullish on Hong Kong as a result,” Salata said recently at a forum.

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Hong Kong ranked as Asia’s second-largest private equity hub, with assets under management by private equity firms exceeding $230 billion last year. As of end-April, the city had 1,125 registered limited partnership funds, up more than 30 percent year-on-year, according to the Financial Services and the Treasury Bureau.

Earlier, Financial Secretary Paul Chan Mo-po said the number of startups in Hong Kong has grown 40 percent in the last five years to approximately 4,700, as the city provides solid financial support for their development at different stages, from angel investment to subsequent rounds of funding and IPOs.

Contact the writer at gabylin@chinadailyhk.com