Recruiting in China

China has been jointly tipped as the country or region where most private equity professionals expect an increase in private equity activity in 2007.

The jurisdiction ranked globally with Germany and Central/Eastern Europe as being likely to see the biggest increase, while rival Asian tiger India ranked fourth.

The survey of 350 private equity professionals, conducted by Simmons & Simmons, showed that private equity is looking toward developing markets for returns.

"Private equity continues to increase its activity outside the developed markets of the US and UK," Simmons & Simmons' China corporate head Damon Le Maitre-George said.

"To achieve the best returns, certain private equity companies are having to broaden their horizons and look toward emerging markets like Asia, where investment opportunities for undervalued companies are strong," Le Maitre-George said.

The survey found that 75% of private equity professionals think hedge funds will be a more important source of capital than last year. Large firms say collateralised debt obligation funds will be almost equally important in supplying capital.

Fifty per cent of respondents said they will increase their activity in alternative energy investments, while large firms will increase their activity in the infrastructure sector.

Private equity firms also had their say on how they choose their legal service providers. They rated client service, personal relationships and track record most highly when choosing a legal advisor, with large private equity firms also regarding geographical coverage as a very important factor in choosing a law firm. Only 5% of respondents believed price is vitally important when selecting a legal advisor. ALB