It won’t come as news to any readers that the fundraising environment is rather challenging right now for a variety of reasons, as we’ve been reporting on all year. What may come as a surprise is that even blue-chip names appear to be facing an uphill battle when it comes to securing LP capital.

The Financial Times reported this week that Carlyle Group – a firm that placed number one in the fundraising-driven PEI 300 ranking as recently as 2018 – has asked LPs for an extension to raise its global flagship Carlyle Partners VIII fund, which is seeking $22 billion. According to the report, Carlyle has asked investors for an extension until August next year to raise the fundraise, having initially expected to close the vehicle by March.

The denominator effect, LPs being tapped out for 2022, and macro uncertainty are all clearly contributing to fundraising taking longer than expected for PE sponsors. Apollo Global Management and Blackstone are also feeling the pinch: the former said in November it will keep its 10th flagship open until the first half of 2023, while the latter was last week reported to be holding off on the launch of a vehicle aimed at wealthy individuals due to heavy investor withdrawals from some of its other products.

And yet, Carlyle’s move feels significant. The firm was running what’s known as a stapled secondaries deal as of October in which secondaries firms could acquire stakes in Carlyle’s predecessor flagship Fund VII and make a primary commitment to Fund VIII, as affiliate title Buyouts reported. Such deals can often help a fundraise over the line via a primary capital injection from secondaries buyers and also deliver liquidity to LPs who may not otherwise have the cash to re-up.

We’re also aware of blue-chip alternatives managers turning to placement agents to help with fundraising – something we first reported on a year ago and noticed again in the lists of clients placement agents said they’ve been working with in their submissions for the recent PEI Awards 2022.

Typical private equity funds have a 12-month offering period with the ability to extend, according to more than 80 percent of PE funds surveyed by law firm Paul, Weiss, Rifkind, Wharton & Garrison in its latest analysis. This is in line with last year’s findings. It’s important to note that extensions beyond the period are often requested by the GPs.

“What you do see in a market like this is a baked-in ability for GPs to extend as opposed to going to all investors and seeking amendments. So, you might have the GP do six months and thereafter the LPAC needs to approve,” Marco Masotti, who leads the private funds group at Paul, Weiss, tells Private Equity International. He notes that the industry will see more extension mechanisms built into fund docs. It’s a crowded market, there are macroeconomic challenges; fundraising is simply going to take longer, and that’s OK, he says.

As we look to 2023, we’ll leave you with this sobering thought: as interest rates continue to rise, LPs are rethinking the role private equity can play in their portfolios, as Episode 2 of our Private Markets and the End of Cheap Money podcast, out this week, explores. With government paper paying higher returns, some LPs are already thinking about dialling down the risk in their portfolios, as we found out. That in turn means lower allocations to private equity, and less LP capital to go around.

The year ahead is going to be unlike many have seen in rather a long time.