UPDATE 2-Swiss private equity firm Partners lifts dividend by 16 pct

Tue Mar 25, 2014 11:21am EDT

* EBITDA profit up 6.4 pct at 300 mln Swiss francs

* Raises dividend to 7.25 francs a share

* Assets under management up 10.5 pct at 31.6 bln euros (Adds bullets, detail)

By Freya Berry and Joshua Franklin

LONDON, March 25 (Reuters) - Swiss private equity firm Partners Group reported a 6.4 percent rise in profits on Tuesday and increased its dividend by 16 percent to 7.25 Swiss francs a share on the back of a 10.5 percent rise in assets under management.

The investment manager has historically favoured mid-market companies, which it says offer more development opportunities than larger deals and are less reliant on broader economic growth. The mid-market is generally accepted as companies worth $50 million to $1 billion.

Partners' assets under management increased last year by 3 billion euros to stand at 31.6 billion euros ($43.6 billion) at the end of the year. Some 1.3 billion euros of the increase came from new investments, the company said, while total new money before outflows last year amounted to 5.1 billion euros.

In 2014 the company expects to see client inflows of between 4.5 billion and 6.5 billion euros.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose last year to 300 million Swiss francs ($339 million) from 282 million in 2012, on revenue up 8.1 percent at 492 million francs, 92 percent of which came from basic management fees and the remaining 8 percent from performance fees.

However, the company cautioned that finding new investment targets at the right price had got more difficult last year, with surging equity markets driving up company valuations.

"The number one issue in the market is pricing," said Co-Chief Executive Andre Frei.

Private equity firms are also competing with corporates seeking acquisitions as the M&A market bounces back. Vodafone this month agreed to pay 7.2 billion euros ($9.9 billion) to buy Spanish cable operator Ono, derailing its IPO.

However, Frei believes the end to the surge in valuations could be in sight, as more companies put themselves up for sale, attracted by the prices on offer.

"We believe asset values will plateau," he said. ($1 = 0.7255 Euros) ($1 = 0.8843 Swiss Francs) (Editing by Greg Mahlich)