Market contacts say Ping An has been testing the market for about $1 billion of private‑equity stakes tied to software, though I couldn't find independent confirmation in public filings. The move comes as dealmaking across Asia-Pacific private equity has slowed sharply. Bain & Company found 2023 deal value plunged to $147 billion.

Ping An Insurance is reportedly testing the market for a portfolio of private equity stakes worth about $1 billion, according to a financial-industry report. The package is said to be weighted toward software and related technology investments, though details on individual holdings or potential buyers remain limited.

Look, sellers of private-equity positions have been active in recent years — but not always by choice.

Deal details and scope

Here's what can be confirmed. The report from the secondary-market publication Secondaries Investor said Ping An has been in exploratory talks about the package. The exact composition of the portfolio — which funds or companies the stakes sit in, their vintage years, or the mix of primary versus secondary interests — hasn't been publicly disclosed.

Bidders will likely have to make offers with incomplete data on the holdings. Pricing will depend on vintage, remaining life, and performance.

Those factors helped make 2023 a difficult year for Asia‑Pacific private equity.

For Ping An, one possible motive is portfolio rebalancing. The insurer is a massive institutional investor with stakes across assets. Shedding a concentrated set of software positions would free up capital and reduce exposure to a sector that’s seen wide valuation swings.

Market context: Asia-Pacific private equity on the back foot

Bain & Company’s 2024 Asia-Pacific private equity report charts a two-year slide. Deal value in the region fell to $147 billion in 2023, the consultancy found. Fund-raising dropped to its lowest level in a decade.

Despite the slowdown, technology still accounted for the most deals and exits. That’s a sign buyers and sellers still see long-term opportunity in tech — even as short-term market conditions make transactions harder to complete.

Investors pulled back across much of Greater China in particular, and geopolitical tensions added to the caution, Bain said. Exits tumbled, too, with IPO markets cooling and trade sales slowing. That left many limited partners reluctant to commit fresh capital, and general partners trimming deal activity.

Japan bucked the trend and saw rising deal activity, helped by stable rules and cheaper borrowing. But elsewhere in Asia-Pacific, the cost of private-equity debt stayed high and public-market volatility made pricing tough.

Why insurers sell PE stakes

Institutional sellers like insurers and pension funds often turn to the secondaries market when they want quicker liquidity than a full exit from an investment would allow. Selling stakes in funds — or partial stakes in portfolio companies — can be faster than waiting for a traditional exit route like an IPO or strategic sale.

For an insurer the size of Ping An, the calculus includes regulatory capital rules, cash needs, and risk exposure. If valuations are high for a subset of holdings, it can make sense to monetize gains. If valuations feel shaky, selling lowers concentration risk.

Secondary buyers will judge the package by expected cash flows and underlying company performance. They’ll also price in macro risks: slowing growth in parts of Asia, rising rates, and the uneven recovery of IPO markets. All of those were flagged in Bain’s regional analysis.

Who might buy a software-focused package?

Buyers could include specialist secondaries funds, strategic corporate buyers, and large institutional investors seeking tech exposure at a discount. Private-equity firms with experience carving out software assets might also bid; software businesses often have recurring revenue streams that appeal to investors focused on predictability.

But buyers will be selective. The market will want clarity on customer retention, revenue growth, and margins for any software assets. They’ll also want transparency about any regulatory or geopolitical risks tied to companies operating in China or other parts of Asia.

Financing costs also matter here. With interest rates elevated for much of the past two years, debt financing for buyouts has been more expensive. That raises the hurdle rate for returns and can squeeze offers, especially for assets that need leverage to boost returns.

What the move signals about Asia-Pacific PE

Ping An’s reported move is part of a broader pattern. Bain’s report noted that Asia-Pacific private equity assets under management fell as a share of global AUM, dropping to 27 percent. Fund-raising was at a decade-low, and many limited partners put new allocations on hold.

In practice, buyers with available capital are in a stronger position to chase assets at better prices. Buyers with dry powder can chase assets at more attractive prices. Sellers who need liquidity may accept lower multiples than they would have two years ago.

At the same time, the report flagged some early signs of improvement by year-end: inflation eased in many markets and some currencies started to recover. Forecasts at Bain pointed to interest rates in many Asia-Pacific markets potentially easing in late 2024 or 2025 — conditions that could lift private-markets activity.

What happens next for the Ping An package

Don't expect an immediate public auction; sellers typically start with a discreet, structured outreach to select bidders. Sellers typically run a structured sale process: an initial information memorandum, a due-diligence window for interested parties, and then competitive bids. The timeline can be weeks or months.

Pricing will reveal a lot. If the package fetches strong bids, it would suggest buyer appetite for Asia-Pacific software assets remains healthy. Weak bids would signal that buyers still want a higher margin of safety before investing.

Right now, markets and limited partners are sorting through performance data and macro signals. That makes secondaries pricing more dynamic — and more opaque — than in boom years.

Ping An’s decision to test the market, even if exploratory, will be watched by other large Asian institutional investors. Many are sitting on similar stakes in late-stage tech and software-focused funds. How those positions are priced could set a benchmark for future secondary trades.

Frankly, the secondaries market is the exit valve private equity needs when primary routes close. For big sellers, it’s a way to re-tune portfolios without waiting years for traditional exits.

Wider implications for buyers and sellers

For buyers, the potential Ping An package is a chance to pick up software exposure from an established investor. For sellers, it’s a test of appetite for Asia-Pacific tech assets under current conditions.

Dealmakers will be watching how bidders value growth versus profitability in software companies. They’ll also watch whether geopolitical concerns around China continue to create a valuation gap between domestic and international buyers.

One final point: timing matters. If rates begin to come down as Bain suggested they might later in 2024 or in 2025, buyers who wait could face stiffer competition and higher prices. Sellers who move now may sacrifice some upside — or they might get out before valuations re-rate.

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Secondaries Investor reported Ping An is exploring the sale of about $1 billion of software-focused private-equity assets.