In 2026, a group of GPs stopped raising funds.

This is not a timely topic, but a serious and thought-provoking reality.

Just as the global IPO market has become bustling again, setting off a new wave of exits, some old players in the primary market can no longer hold on.

An established PE firm named Vestar Capital has decided to abandon the fundraising for its new fund and instead focus on managing its existing investment portfolio.

How long - established is Vestar Capital? It was founded in the 1980s, almost contemporaneous with KKR and Blackstone. Since its establishment, Vestar Capital has successfully raised seven funds. However, when it launched the fundraising for its eighth flagship fund a year ago, Vestar Capital found itself abandoned by LPs.

The primary reason for Vestar Capital's failed fundraising is, of course, its performance. According to Forbes, the last fund raised by Vestar Capital was Vestar Capital Partners VII, launched in 2018. The IRR of this fund was only 7.7%, far lower than the average return rate of 14% of the S&P during the same period.

Without new fundraising, Vestar Capital's asset management scale has been slowly declining. As of the latest report submitted to the SEC, Vestar Capital's asset management scale has shrunk to $3.3 billion, less than half of what it was a decade ago.

In fact, Vestar Capital has been in a "zombie" state for at least two years. Forbes reported that since 2023, Vestar Capital has not made any new investments in portfolio companies. It has been spending its time managing the 12 companies it acquired in the past. However, its performance in exits in the past two years has been mediocre, with only one company's sale announced in 2025.

The Washington State Pension Fund is an LP of Vestar Capital Partners VII. The disclosed documents show that as of June 2025, it had invested $233 million and recovered $140 million. That is to say, the DPI of Vestar Capital Partners VII in its seventh year was only 0.6 times.

The past year has been a turning point for the global PE industry, with strong recovery in all aspects of fundraising, investment, and exits. The total transaction volume of the US private equity industry reached $1.2 trillion in 2025, making it the second trillion - dollar year in history, second only to 2021. Leading institutions such as Blackstone set new records in fundraising, and the listing of Medline at the end of the year set the highest return amount record in the history of the PE industry.

However, for institutions like Vestar Capital, all the excitement belongs to others. In the "hidden corners" outside the spotlight of the PE industry, they still face difficulties in fundraising and exits. They can only hold on to a batch of depreciating projects that are hard to sell and "survive" on management fees. Isn't this another kind of truth?

Can't Hold On Anymore: The PE Industry Ushered in a Year of Mass Project Bankruptcies

Vestar Capital's situation is not an isolated case. Forbes statistics show that at least 20 private equity institutions with a management scale of around $10 billion became "zombie funds" in 2025, including Onex Partners with a scale of $23 billion and Madison Dearborn Partners with cumulative fundraising of over $36 billion.

What Forbes calls "zombie funds" refers to institutions whose new - phase fund scale has been significantly reduced or whose fundraising has been completely cancelled. As a result, their investment activities have actually come to a halt, and they are only relying on managing old funds to survive.

The actual number of zombie institutions may be much larger than Forbes' statistics. A PitchBook report states that hundreds of GPs in the North American and European markets have failed to raise new acquisition funds since 2020.

Some people's estimates are even more exaggerated. Franzén, the CEO of EQT, recently said in an interview with the Financial Times that among the approximately 5,000 GPs that successfully completed fundraising in the past seven years, less than half may be able to continue fundraising in the next 5 to 10 years, and there will be thousands more "zombie GPs" in the market.

The increasing number of zombie funds has created a strange market freeze. Forbes quoted Tom Donovan, the head of consulting firm Houlihan Lokey, as saying that there are currently some GPs in the primary market that cannot raise the next fund but are reluctant to sell their investment portfolios. Under the current market conditions, selling projects can hardly bring a hurdle rate of more than 8%, which means GPs cannot get carry. And once they sell their assets, they will no longer receive fees.

However, this situation obviously cannot last. Just last year, there was a significant increase in the bankruptcy rate of portfolio companies of private equity institutions.

Data from S&P Global Market Intelligence shows that since the interest - rate hike cycle began in 2022, the number of corporate bankruptcy filings in the United States has risen sharply, increasing from 327 in 2022 to 749 in 2025. Moreover, 2025 was a year when the bankruptcy crisis spread to large and complex enterprises. By the end of 2025, the payment default rate of the Morningstar LSTA US Leveraged Loan Index, calculated by the number of borrowers, dropped to 1.18%, lower than the 1.45% at the end of 2024. However, calculated by the default amount, the default rate rose from 0.91% to 1.23%, involving an amount of $17.4 billion. This indicates that the defaults in 2025 were not sporadic bankruptcies of small and medium - sized enterprises but were concentrated in private - equity heavy - position projects with high leverage and large scale.

It is becoming increasingly obvious that the capital - market recovery since 2025 cannot save the exits of these projects.

Looking at the recent hot IPOs, there is a strong star effect. Investors only chase a small number of companies with fast growth, popular industries, high - quality cash flows, and large enough scale. Among the nearly 30,000 projects waiting to be exited in the primary market (according to Bain & Company data), a large part are products of the low - interest - rate era. Their investment logic was "leverage + scale expansion." This logic once created brilliant returns, with the average annual return rate of US private equity funds exceeding 13% from 2012 to 2021. However, in the high - interest - rate era, such assets are no longer in demand.

This also explains the real reason for the formation of zombie funds: it's not that the assets can't be sold, but that selling them will cause the IRR to collapse.

The Co - existence of IPO Wave and Bankruptcy Wave

Therefore, in 2026, we witnessed a stark contrast.

On the one hand, there is a booming market recovery, and a number of institutions have achieved explosive performance. Blackstone recently disclosed its 2025 financial report. Its revenue in Q4 of 2025 reached $4.36 billion, and the net profit was $1.015 billion. Stephen Schwarzman excitedly said that this was Blackstone's "best performance in 40 years." Just the IPO of Medline last year earned Blackstone at least billions of dollars. Looking forward, Schwarzman said that Blackstone is expected to have one of the largest IPO issuance scales in history.

On the other hand, the private equity industry has also witnessed an unprecedented wave of project "bankruptcies," and the number of "zombie funds" has increased sharply.

Behind this is a drastic polarization in the pattern of the private equity industry. Preqin data shows that the private equity financing amount in the United States in 2025 was approximately $761 billion, a decrease of about one - tenth compared to 2024. However, leading institutions did not feel the chill of the market because the largest ten funds absorbed 46% of the total fundraising scale. It is unprecedented that a few Mega Funds can control nearly half of the market's funds.

Franzén, the CEO of EQT, said in an interview that 50 - 100 large institutions will absorb 90% of the global private capital, and the remaining small and medium - sized institutions are hardly able to compete.

There are many possible reasons for market polarization: in the new market environment, leading GPs firmly occupy the high ground of resource allocation. The scarce and high - quality assets they hold are more popular in the market; their operational capabilities and brand reputation make it easier for projects to attract capital and achieve exits; in an environment with high uncertainty, the importance of brand reputation and historical performance increases...

On January 29, several private equity partners of Apollo Global Management co - authored an article, stating that with the end of the low - interest - rate era, the "illusion" that the "too - simple strategy of buying high - quality companies" can stably bring alpha has ended. They believe that from 2026 onwards, private equity institutions must return to the roles of builders and operators and turn value creation from a buzzword into a reusable system.

In other words, the investment strategies of many PE institutions in the past were actually quite naive, and they made money mainly thanks to the dividends of the era. The future market will still belong to systematic players with methodological accumulations and resource advantages.

In the Chinese Market, There Are More Funds but Fewer GPs

If we turn our attention to the domestic market, we can also see some similar scenarios playing out.

On the surface, the Chinese private equity industry is also witnessing a climax of exits. According to data from Touzhong Jiachuan, a total of 170 Chinese enterprises with VC/PE backgrounds were listed in 2025, including those on the A - share, Hong Kong, and US stock markets, a year - on - year increase of 27.82%. The book - value exit return scale of VC/PE institutions from IPOs was 431.8 billion yuan, doubling compared to the previous year.

However, this wave of IPO dividends is fundamentally different from the registration - system dividends of the past - this time, it is no longer "the rising tide lifts all boats."

Although the passing rate of A - share IPOs in 2025 reached 95.7%, this is the result after "strict selection." Considering factors such as terminations and withdrawals, the "real" passing rate is only 45.3%. A total of 116 enterprises were successfully listed on the A - share market in 2025, only 16% more than in 2024, which is at a relatively low level in the history of the A - share market.

In fact, in the current market environment, it is still very difficult for mid - tier projects to exit.

For mid - tier projects, the first problem is that it is difficult to get the "green channel." Without entering the green channel, it is very difficult to list on the A - share market through an IPO. Some non - conventional methods may need to be adopted, such as "quasi - backdoor listing." The recent acquisitions of listed companies by many unicorns may very likely be due to this reason. If they give up the A - share market and turn to the Hong Kong stock market, they will face the problem that mid - tier companies are not popular in the Hong Kong stock market.

In 2025, the situation of "new stocks always rising" in the Hong Kong stock market only lasted for about two months. After November, the break - even rate rose back to 45%, and the market value of some enterprises decreased by more than 50% compared to the issue price, becoming "mini - market - value" enterprises. Some new biopharmaceutical stocks had an average daily trading volume of less than one million yuan, making it difficult for investors to sell and exit.

As mentioned earlier, the total book - value exit return scale of 170 IPOs of Chinese VC/PE institutions in 2025 was 431.8 billion yuan. Taking a closer look at the data, you will find that the IPO returns are extremely concentrated at the top. The book - value returns of the top 10 IPOs reached 200.7 billion yuan, accounting for half of the total returns. The book - value returns of the top 85 IPOs above the median were 415.2 billion yuan, accounting for 96% of the total returns.

That is to say, although it seems like a huge fortune, there are actually not many institutions that really have a "sense of participation."

Statistically, 2025 was also a turning point for the Chinese VC/PE industry, with a significant recovery in fund - raising. A report from the Asset Management Association of China shows that the scale of newly registered funds in China in 2025 reached 2.71 trillion yuan, a year - on - year increase of 15%; the number of newly registered funds was 5,024, a year - on - year increase of 20%; and the average scale of each fund was 539 million yuan.

However, at the same time, the number of newly added private equity and venture capital fund managers has been continuously decreasing, with only 104 new managers added in 2025. In contrast, the number of GPs exiting the market is much larger - a total of 662 managers were deregistered throughout the year, including 304 deregistered by the association and 296 voluntarily deregistered.

The industry is recovering, but the number of players is decreasing, indicating that a similar polarization process is also taking place in the Chinese VC/PE industry. Although it is cruel, for the overall situation of the primary market, this may be a necessary "clearing out" of mediocrity.

This article is from the WeChat official account "Touzhongwang", author: Tao Huidong, published by 36Kr with authorization.