Private equity firms eye more Asia deals: E&Y

LONDON Wed Oct 17, 2012 7:04pm EDT

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LONDON (Reuters) - Private equity firms are planning to increase investment in Asia over the next year as they look to tap into potential growth, a survey from Ernst & Young ERNY.UL showed.

Some 83 percent of private equity firms surveyed by Ernst & Young for its Global Capital Confidence Barometer, said they planned to increase investment activity in emerging Asian countries, such as Indonesia, over the next 12 months, making it the most appealing region for professional dealmakers.

Private equity groups have flooded into emerging markets in recent years, looking for large profits from companies in fast-growing economies with growing and increasingly wealthy middle classes.

Some early investments show signs of paying off. Leading European private equity firm CVC is seeking more than $2 billion for Indonesia's largest department store chain Matahari - more than double the price it paid just two and half years ago.

Emerging Asia was followed by China and the United States in equal second place, where 72 percent of private equity respondents said they planned to increase investment.

Some 42 percent of the 100 respondents to the survey said they planned to do more deals in Europe.

Despite their confidence in some markets, private equity firms are more concerned about the number of potential deals they can find.

Seventy-eight percent of private equity groups surveyed said they were confident in the number of deals available, compared with 95 percent six months ago, reflecting the difficulty for buyers and sellers to agree on price, and large corporations' reluctance to sell non-core assets, Ernst & Young said.

(Reporting by Simon Meads; Editing by Helen Massy-Beresford)

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