Frank Tang of FountainVest

Speaking to AVCJ, Tang says there is a feeling of "exuberance" in China's private equity industry that stems from the liquidity in the market. But changing regulatory directives make the industry's development a "three steps forward, one step back kind of a process" that has created a "boom and bust" cycle.

He further notes that China's buyout market is in its nascent stages, and while there are buyout opportunities, the options are limited for the time being.

"There are, broadly speaking, two types of buyout opportunities. One is the state-owned enterprise privatization that is largely driven by the government, and the second type is selective buyouts in the traditional sense of Western buyouts ... but that is very rare given that we're still dealing with first-generation entrepreneurs," he says.

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