Higher prices for companies in North America and political and regulatory risks in China are leading private equity investors to consider the emerging markets of south-east Asia, a survey has found. Private equity firms that raised money from pension funds, insurers and endowments on the promise of delivering superior returns, have unearthed few deals in China and have competed fiercely for the businesses they can find, pushing up prices.

The trend to higher prices is echoed in private equity's largest market, the United States, where the supply of cheap financing from lenders has given buyout firms the firepower to pay more for companies. Nascent Asian economies such as Indonesia and Vietnam were favoured by one fifth of investors over the region's more mature markets including China and India, according to a survey conducted by private equity firm Coller Capital.

Over half of the 131 investors questioned said the industry had been too optimistic about China and 69 percent felt the same about India citing issues around politics, corruption and regulation. "It's partly a matter of people understanding the risks better and partly a matter of increasing competition, as more and more money, both domestic and international, chases deals in China," Jeremy Coller, Chief Investment Officer at Coller Capital told.

Copyright Reuters, 2012