(Bloomberg) -- As the private equity industry soldiers through one of its toughest ever fundraising environments, some big-name firms are tapping outsiders to help them to dig out and access new pools of capital.

Many are increasingly approaching placement agents in Europe and the Middle East, a development that marks yet another fallout of the end of the era of cheap, easy-to-access money.

Higher interest rates and economic uncertainty have pushed institutional investors such as pension funds and endowments to scale back their private asset allocations. And as deals activity and initial public offerings have cooled, private equity firms are finding it hard to return money to these investors, who as a result have less to allocate to new funds. 

That’s left firms scrambling to raise money, a problem some are encountering for the first time.

Swedish group EQT, which relied on intermediaries before it got its own sales force in 2009, is among firms that recently hired European agents to help with fundraising, according to people familiar with the matter. The 30-year old firm wants to raise more cash from private wealth clients, an area where it doesn’t yet have large capabilities, one of the people said. They asked not to be identified discussing private business.

While the services of placement agents were in vogue at one time, they fell out of favor over the past decade. That’s partly because they were less needed during the cash glut in the low-rate era, but also because of corruption probes that saw some public pensions banned from using them.

Now, some agents say that in the past 12 to 18 months there’s been a surge of interest from blue-chip firms looking to raise for existing or new strategies even in countries where they already have a presence.

Because PE firms often focus on long-run relationships with big institutions, they don’t always have the people or expertise to quickly open new routes to cash. Many are now hoping a middleman will bring in a fresh clients, such as smaller pension funds and family offices in Europe and the Middle East. 

“We have some general partners whose investor relations teams had only been used to saying ‘sorry, we’re full’,” said Sunaina Sinha, head of private capital at Raymond James. “What they were not used to doing is knocking on doors and pitching for investor commitments.”

Her firm is currently raising for funds of between $400m and $20 billion, including for some prominent names.

Fundraising

In the nine months through September, the aggregate capital raised by private equity firms across strategies including buyout, infrastructure and private credit was $900 billion, according to data by Preqin, a pace that means 2023 is likely to fall short of 2022’s $1.4 trillion.

It forecasts that fundraising will recover in later years, with a greater role being played by private wealth, a new area for many PE firms. 

TPG has also had talks with some European placement firms, according to people familiar with the matter. 

The group, which in May revised the size of its flagship funds downward, has used placement agents over the years to reach certain areas and regions in which it didn’t have enough of a presence, a person familiar with the firm’s strategy said. The US firm has scaled back on using intermediaries as its European team has expanded. 

Vista Equity Partners, which has assets of about $100 billion, has also spoken with placement firms, according to people familiar with the matter. A spokesperson said in an emailed statement that the company has added internally to its team in London and isn’t pursuing outside agents.

The Austin, Texas-based firm is currently trying to reach $20 billion for its eighth flagship fund, which was meant to close in October. In September, Axios reported that Vista was considering extending the fundraising round into 2024 to hit its cap.

EQT said in October that that fundraising is taking longer than before. Its flagship buyout fund, which had its August deadline extended, is now expected to close near a €21.5 billion hard cap in the first quarter of 2024. EQT and TPG declined to comment.

Private equity firms had been anticipating a tougher environment. In a survey by S&P earlier this year, 45% of executives expected fundraising conditions in their location to deteriorate in 2023.

Warren Hibbert, managing partner at London-headquartered placement firm Asante Capital, said the challenges have coincided with a spike in interest from high-profile private equity groups that wouldn’t typically have opted for the firm’s services before. 

Asante is currently raising for funds as large as $5.5 billion, including for some US houses that have traditionally relied on North American institutions.

William Clegg, co-founder of Colmar Capital, said he’s also being approached to tap family offices and other wealth clients in the Middle East. Some requests have come from large PE firms managing assets of around $100 billion that are now looking outside their relationships with deep-pocketed sovereign wealth funds.

And as firms try to find new money, some are opening their doors to investors with much smaller amounts than they would have previously considered.

“Many of these firms now are accepting any ticket,” said William Barrett, managing partner at Reach Capital. “Today when we see large groups, they used to have a threshold of $5-10 million minimum, and now they can even accept below $5 million.”

--With assistance from Dawn Lim.

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