Core Insights - The private equity secondary market (S transactions) in China is gaining prominence, with a total of 395 transactions worth 107.8 billion yuan in 2024, marking a 46% increase from 2023 [2][4] - The market is expected to continue its growth trajectory, with 542 transactions recorded in the first half of 2025, surpassing the total number for 2024 [2][4] - State-owned enterprises (SOEs) have emerged as a significant variable influencing both sides of the transaction, becoming the largest seller in the S transaction market [6][8] Market Growth and Trends - Since 2018, the S transaction market has experienced an average annual growth rate exceeding 50%, with the total transaction volume surpassing 100 billion yuan for the first time in 2022 [4] - The market saw a decline in 2023 due to tightened IPO regulations and changes in selling rules, but has rebounded strongly in 2024, reaching a historical high [4][5] - The revival of the S transaction market is attributed to favorable policies and a positive outlook in the A-share and Hong Kong markets, particularly after the "9·24" policy [4][5] Role of State-Owned Enterprises - SOEs have become the largest seller in the S transaction market, driven by the need to liquidate early-stage funds and optimize asset management [8][9] - The demand for SOE participation in S transactions has increased significantly, with local SOEs actively engaging in fund share transfers [7][8] - The successful transfer of SOE shares is expected to enhance market liquidity and increase the volume of tradable assets [7][8] Diversification of Transaction Models - The S transaction market is evolving with diverse transaction strategies, including fund share transfers, GP-led transactions, and structured deals [11][12] - New pricing models, such as "low transaction price + backend sharing," are emerging to address uncertainties in the market [12][13] - Local S funds are adopting a "city-level to district-level" model to alleviate regional liquidity pressures and strengthen local industries [13] Future Outlook - The S market is projected to transition from a niche market to a core ecosystem within the private equity industry, driven by the exit demands of 15 trillion yuan in existing assets [15][16] - The market is expected to see a shift towards professional and diversified transactions, with a focus on high-quality assets and active management capabilities [15][16] - Continued policy innovations and regional pilot breakthroughs are necessary to address the challenges faced by state-owned investment institutions in managing existing assets [16][17]