With leverage no longer considered a sure thing to generate returns, private-equity investors now have to focus on growth.

This shift in strategy is being seen on the institutional level as well, where limited partners are increasingly setting aside a significant portion of the private-equity allocations for firms that target emerging markets.

Coller Capital and the Emerging Markets Private Equity Association reported that in their survey of 151 pensions, foundations, endowments and fund-of-funds managers from North America, Europe, Asia, Africa, the Middle East and Latin America, more than half of the respondents said they planned to accelerate commitments to the emerging-markets segment over the next two years.

The survey, which was released this week, suggested that institutional investors have become less confident in mature markets . Roughly two-thirds of the respondents said they expect emerging-markets funds will be less affected by the global downturn than peers in developed markets. More than three-quarters of the respondents said they expect annual net returns of their emerging-markets portfolio to exceed 16%, and fewer than a third see their global private-equity portfolio hitting that benchmark.

While an underlying demand exists, emerging-markets firms have experienced as much difficulty raising funds in recent years as groups targeting mature regions. Last year, 196 private-equity firms targeting emerging markets closed on $22.6 billion, according to the EMPEA. In 2008, emerging-markets general partners were able to secure $66.5 billion. The drop-off, however, is in line with the broader fund-raising market.

The favorite destinations of limited partners, for the most part, haven't changed: China, Brazil and India rank first, second and third in attractiveness. Interest has waned in Central and Eastern Europe, and investors are turning instead to other Asian and Latin American markets.

Sarah Alexander, the EMPEA's president and chief executive, said in a press release that investors who have already built up exposure in China and India are now "looking for the next frontier and see great investment opportunities in less penetrated markets."

In recent weeks, a number of new funds have finished raising money that will be put to work in emerging markets. Advent International, for instance, closed on $1.65 billion for its latest Latin America fund this month, wrapping up its fifth vehicle for the region oversubscribed. Carlyle Group, in the same week, corralled $2.55 billion for its latest Asian fund, topping its predecessor by more than 40%.

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