Sale tests pricing for China funds as secondary buyers push for steep discounts
Canadian pension heavyweight Caisse de dépôt et placement du Québec is testing investor appetite for China private equity at a time when secondary buyers remain wary and discounts can run as deep as 30 percent.
Bloomberg reports that La Caisse has put about US$1.5bn worth of fund stakes up for sale, largely tied to China-focused strategies run by HSG (formerly Sequoia Capital China), Warburg Pincus and Boyu Capital Investment Management.
Greenhill & Co. is advising on the deal.
In an emailed statement, the pension manager said: “The secondary market is one of several tools La Caisse actively uses to manage its portfolio across our global private equity platform. In terms of investments in China, La Caisse continues to focus on liquid markets.”
La Caisse launched the sale process in early February after months of sounding out investors and potential advisers.
The pension fund may ultimately sell only part of the portfolio, depending on market conditions and pricing, according to people familiar with the matter cited by Bloomberg.
Those sources said China-focused funds continue to change hands at relatively heavy discounts, reflecting weaker deal activity and ongoing geopolitical concerns.
“Global secondary investors remain disciplined in their approach to buying LP stakes in China-focused funds,” said Xuanyi Liu, private funds partner at law firm Morrison Foerster.
Liu said discounts can reach 30 percent, depending on the portfolio.
According to a January report by Jefferies Financial Group Inc., Asia LP-led secondary deals totalled about US$5bn in 2025, or roughly 4 percent of the US$125bn worldwide total, while the global secondary market, including general partner-led deals, rose 48 percent to US$240bn.
With $496bn in assets as of June and roughly US$362bn on a converted basis, La Caisse is Canada’s second-largest pension fund.
It is among the first limited partners to bring a major Asia secondary portfolio to market this year, at a time when many institutional investors are using secondaries to raise liquidity and rebalance portfolios.
Bloomberg reports that La Caisse has previously sold private equity fund stakes in Asia, the US and Europe on the secondary market, but this is its first sale focused on China.
The pension fund closed its Shanghai office in 2023 and now uses Singapore as its main investment hub in the region.
DealStreetAsia reported in December that La Caisse was preparing a US$1bn portfolio sale of private fund investment stakes, signalling an increased willingness to use the secondary market to reshape its exposures.
According to its 2024 annual report, cited by Bloomberg, La Caisse held $90bn in private equity at year-end 2024.
Asia accounted for about 7 percent of that exposure, compared with more than 40 percent in the US.
The same report showed that La Caisse’s annualized private equity returns over one- to four-year periods fell short of their respective benchmarks.
Canadian pension funds and other global investors have been reworking their China strategies in recent years as geopolitical tensions rise and growth slows in the world’s second-largest economy.
Some of Canada’s largest plans have also been scaling back direct private equity bets, while La Caisse has faced pressure within Québec to direct more capital to local opportunities, Bloomberg reports.
A recent pick-up in initial public offerings in Hong Kong has offered some hope that liquidity conditions in private markets may improve.
Still, many investors are waiting to see what level of profit actually materializes from these listings once lock-up periods expire.
“Developments such as increased IPO activity in Hong Kong may provide helpful liquidity signals, which could support secondary buyer interest in these LP stakes compared with a year or two ago,” Liu said.
