John Zhao seeks more targets in state sector reform

Last year, Hony also helped capitalize a 3 billion yuan fund with Shanghai Media Group's SMG Pictures to invest in television and film, primarily animation.

Hony Capital also is moving to complete its buy-out of New York-listed mobile games developer Giant Interactive

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In March Hony, Baring Private Equity Asia and Giant chairman Shi Yuzhu said they would acquire the 50.7 percent outstanding shares in the Cayman Islands-registered firm they did not own.

"We'll re-list that," said Zhao, declining to discuss markets or timelines. "We're still in the middle of trying to privatize it. It's a sizable business."

Forced creativity

Zhao, who has divested stakes in 15 companies, says that private-equity managers are finding increasingly creative ways to exit investments, as the shutdown of China's capital markets for more than a year and the difficult financing environment have taken their toll.

Initial public offerings, which represented more than 90 percent of private equity exits in 2011, decreased to less than one-fifth by 2013, according to Hony data.

"All this creativity is being forced out of us," Zhao said. "In China, we are seeing IPOs, mergers, management buyouts and buybacks. This is a good sign. There's a lot of work that a value-creation minded private equity firm can engage in."