Reuters reported that a surge in stake sales by private equity firms had been observed in mainland China. Sources of the news agency said unfavorable economic conditions had forced private equity firms of small and medium enterprises to resort to takeovers and buyouts to regain equity. This was seen as a better deal considering initial public offering plans for companies that private equity firms had holdings in had failed.

Reuters said small and medium enterprise owners typically prefer to exit and regain their equity back via IPOs. Public listings would generate more return as oppose to buyouts and takeovers.

Private equity firms like Chinese private equity firm CDH Investments, for example, had been able to convince companies it owned to sell majority stakes. Sources said stricter public listing regulations, an unstable public market in Hong Kong and tightened credit conditions were reasons enough for small and medium enterprise owners to cede control of their companies.

CDH Investments would be looking to gain its equity back should the acquisition deal between South Beauty Investment Co Ltd, of which CDH owned an unspecified stake, and CVC Capital Partners push through. Sources said Warburg Pincus was able to exit from RCS Group Co when it sold its holding to Swedish firm EQT Partners.