What the growing IPO pipeline in Asia is telling investors

IPO activity in Asia is picking up, but the real story starts well before companies reach the market. Strong pipelines often reflect confidence from founders and improving conditions beneath the surface. That can create opportunities for investors willing to look ahead.

Portfolio Manager for the Fidelity Special Situations Strategy, Dale Nicholls and Investment Director for Private Markets, Tony Liu talk through the current IPO environment in Asia and what it reveals about private company activity. Drawing on their experience across the region, they explain how pre‑IPO investing fits into the broader opportunity set and how they think about risk, timing and growth.

This episode was recorded on 23 March 2026.

Transcript

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Tim Connolly (Head of Institutional, Fidelity Australia)
Welcome to Fidelity Sound Bites. I’m Tim Connolly, Head of Institutional for Fidelity Australia. Today we’re discussing pre‑IPO investing, and more specifically, pre‑IPO investing in Asia.

Joining me from our Singapore office is Dale Nicholls, Portfolio Manager for the Fidelity China Special Situations Strategy and the Asia Pre‑IPO Strategy. From our Hong Kong office, we also have Tony Liu, Investment Director for Private Markets.

Dale, Tony, welcome.

Dale Nicholls
Hi Tim.

Tony Liu
Hello.

Tim Connolly
You were both out here recently meeting with institutional investors, and there’s clearly a lot of interest in Asian equity markets, particularly China, as well as in pre‑IPO investing.

Tony, to start with you, how do you define pre‑IPO investing, which is also often referred to as growth investing?

Tony Liu
In our context, pre‑IPO investing is essentially late‑stage venture investing. Some people also call it growth equity, and they largely mean the same thing.

It sits between traditional venture capital, which focuses on early‑stage companies, and public equity. We tend to look at later‑stage, more mature private companies. These businesses typically have proven business models and steady revenue streams. They may or may not be profitable, but in most cases there is a clear trajectory toward profitability.

At this stage, the question is no longer whether the business works. The question becomes how big, how scalable and how durable the business can be.

On the risk side, it’s less about product‑market fit or technology disruption. It’s more about execution, competition and governance. We also expect these companies to be ready for an IPO in the relatively near term.

As a pre‑IPO investor, our expectation is that two to three years after our investment there will be a liquidity event, usually an IPO in an Asian context, and we will achieve returns from that event.

Tim Connolly
The strategy is focused on Asia, and Dale, you’ve been with Fidelity for almost 30 years, based in Asia that entire time. What first attracted you to investing in Asian markets?

Dale Nicholls
I started my career in our Japan office as an analyst covering Japanese stocks. This was a time when Japanese businesses were expanding rapidly, and there was significant global interest in Japanese management techniques such as just‑in‑time manufacturing and Kanban.

As an analyst, I was also covering the technology sector. That gave me early exposure to the emergence of highly competitive companies from markets like Taiwan and Korea, many of which today are enabling developments in artificial intelligence.

After that, we saw significant growth emerge from China. Throughout this period, Asia continued to develop and diversify. It would be difficult to find a more vibrant and opportunity‑rich region globally. There is enormous diversity, constant change and many highly competitive companies. I still see a great deal of opportunity ahead.

Tim Connolly
You took over management of the China Special Situations Strategy in 2014, and you’ve been visiting China since the late 1990s. Can you talk us through how the China equity market has evolved over that time?

Dale Nicholls
The evolution has been remarkable. While economic growth has slowed from earlier periods, it remains significant. More importantly, the transformation at the industry and company level has been profound.

It’s hard to find an industry where Chinese companies have not become more competitive over time, often on a global basis. This has been driven by large‑scale investment in research and development and by increases in scale.

The auto industry is a good example. China began largely as a joint‑venture market reliant on overseas technology. Today, private Chinese companies are among the most competitive globally, supported by China’s strength across the battery supply chain.

The equity market has also changed significantly. In the early days it was dominated by state‑owned enterprises such as banks, telecoms and energy companies. Today, it is dominated by private companies, particularly in technology‑related sectors, many of which are globally competitive. That change is significant and continues.

Tim Connolly
Pre‑IPO investing has long been part of Fidelity’s approach, including in China. Can you share some examples of pre‑IPO investments that have been successful?

Dale Nicholls
Pre‑IPO investing is an important part of the strategy. Companies are coming to market later globally, and China is no exception, so accessing opportunities earlier has been valuable.

Alibaba was one of the earliest and most significant successes. Since then, many other investments have contributed. ByteDance is currently our largest private holding and one of the largest positions in the portfolio. We’ve added to it over time, and it has increased several times from our initial investment. We still view our valuation as conservative given the pace of growth and the optionality in the business.

Other examples include Didi in ride sharing, Meituan in food delivery, Full Truck Alliance in logistics, and SenseTime in artificial intelligence. It has been a very rich area of opportunity for us.

Tim Connolly
Tony, coming from a private equity background, what do you see as Fidelity’s key advantage in pre‑IPO investing?

Tony Liu
One of our most important advantages is our brand. Fidelity is known as a long‑term, fundamentally driven investor that can support companies both in private markets and after listing. That reputation resonates strongly with founders of high‑quality companies.

Having Fidelity on the cap table can strengthen an IPO story. It allows us to access better deals, engage earlier with management teams and, in some cases, secure terms that help protect on the downside.

Another advantage is how our research resources are structured. Compared with many private equity firms that rely on generalists, we have specialist industry analysts across major Asian markets. That continuity of research provides deeper insights and stronger relationships, which also helps drive deal flow.

Tim Connolly
Are there particular sectors where you’re seeing more opportunity?

Tony Liu
It helps to step back and think about the drivers of returns. In late‑stage private investing, returns are driven primarily by earnings growth. Entry and exit multiples usually play a smaller role and can even detract from returns as fast‑growing companies move toward public markets.

Because of this, we focus on businesses with strong and durable growth. Our investment horizon is often three to five years, so we need confidence that growth can be sustained.

Technology is a major theme, but we define it broadly. That includes AI, semiconductors and robotics, as well as companies using technology to transform traditional industries. If technology can meaningfully change the trajectory of a slow‑growing sector, it becomes an area of interest for us.

Tim Connolly
Dale, sentiment toward China can swing widely. What’s your outlook, and what would you say to investors concerned about geopolitical risks?

Dale Nicholls
China has always been a volatile market, but from a bottom‑up perspective that volatility can create opportunity. The market continues to trade at a significant discount to global peers, particularly the US.

Policy direction in China is often viewed as uncertain, but the government operates through structured five‑year plans that provide a clear framework for priorities.

Corporate competitiveness continues to improve, driven by sustained investment in research and development and capital expenditure. Economically, China has been through a difficult period, particularly in property, but the worst of the correction appears to be behind us. Supply has adjusted and underlying demand remains.

Consumer confidence has been weak since COVID, leading to high household savings. A recovery in confidence would support consumption and broader growth. At the same time, investment in areas such as artificial intelligence is accelerating. Against a backdrop of cautious sentiment, this creates a constructive setup for markets over time.

Tim Connolly
Finally, Tony, what does the IPO outlook in Asia look like for the remainder of the year?

Tony Liu
Last year was strong for Asian IPOs, with proceeds roughly doubling year on year. Asia accounted for more than half of global IPO proceeds.

That momentum is continuing. In China alone, there are more than 300 companies waiting to list in Hong Kong. The pipeline remains very strong, and we expect activity to stay elevated.

Tim Connolly
Thank you very much for joining us. It’s a really exciting area with significant long‑term potential, and we look forward to seeing how it develops.

I know both of you will be back out here later this year, so we look forward to meeting with more clients again. Dale, Tony, thanks very much for your time.

Tony Liu
Thank you.

Dale Nicholls
Likewise. Thanks.

27 March 2026

Asia China

Dale Nicholls

Portfolio Manager, Fidelity China Special Situations PLC

Tony Liu

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