Private Equity Veteran ShawKwei Is Shunning China Investments

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(Bloomberg) — ShawKwei & Partners, one of Hong Kong oldest private equity firms that three years ago decamped for rival Singapore, is staying away from China despite a more bullish sentiment growing toward the world’s second largest economy.

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Beijing’s tilt toward state-backed firms, an unpredictable political climate, and ongoing US-China decoupling have made Chinese private equity effectively uninvestable, according to founder Kyle Shaw.

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“It’s not that I dislike China,” Shaw said in an interview. “It’s just that I don’t have the time right now to focus the management resources on something where I think the returns will be thin when I’ve got more attractive opportunities elsewhere.”

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Shaw built his firm since the late 1990s with a focus on China’s manufacturing boom, but is now at odds with Beijing’s recent pledges to court private entrepreneurs and foreign capital. From its perch in Singapore, the firm has instead embarked on an acquisition spree in the US and Southeast Asia, and is looking to grow in the Middle East where there are more promising opportunities and they are more pragmatic and agnostic to foreign ownership, he said.

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The private equity industry on the whole has been forced to reassess China, with larger firms such as KKR, Carlyle Group and Blackstone Inc. also pausing or pulling back from deals in the country. The largest PE firms participated in just 6% of the deal value in China last year, down from 24%, on average, between 2018 and 2023, according to Bain & Co. Government-affiliated investors doubled their deal activity in China in the period. 

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China’s CSI 300 stock index is up about 2% this year, beating only Japan’s Nikkei among major global indexes. Hong Kong’s benchmark Hang Seng has surged more than 20%, in part because of an influx of mainland Chinese firms.

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Even so, foreign investors are once again feeling the pull of China, in particular after the emergence of DeepSeek captured investors’ attention. Some 60% of global sovereign wealth investors see China as a high or a moderate allocation priority over the next 5 years, up from 44% last year, an annual Invesco Asset Management survey conducted among 83 sovereign funds and 58 central banks in the first quarter of 2025 showed.

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Since 2020, ShawKwei has invested in seven companies in US, Southeast Asia, Hong Kong and Australia, spanning the energy, beauty and wellness, precision manufacturing and advanced battery materials sectors. The firm manages about $1 billion.

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Its biggest investment has been a $350 million bet in Singapore and the US on three companies it has combined to form Liberty Energy Solutions, which has grown revenue about 30% a year. Managed from Singapore, Liberty specializes in maintenance and construction services for oil and gas refineries and petrochemical facilities operated by global firms. It aims to double pretax profit to $100 million in the next three years.  

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“When I visit places like Thailand, Malaysia, Singapore, India, and the Middle East, I find a pragmatic mindset, one that embraces Deng Xiaoping’s philosophy: it doesn’t matter if the cat is black or white, as long as it catches mice.” 

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