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'Fundraising is most challenging in the corporate PE segment' Carlyle's Lee proclaims

Private equity fundraising is stuck in a rut.

We heard it last week on Blackstone Inc.'s second-quarter earnings call, and it came up again this week when it was time for Ares Management Corp. and The Carlyle Group Inc. to face analysts' questions. All three reaffirmed what they reported last quarter: The spigot has not run dry, but it definitely is not gushing like it did in 2021, a record fundraising year for the industry.

"No doubt the fundraising market is challenging right now, and this could persist for a bit as [limited partners] adjust to market dynamics. And it's most challenging in the corporate private equity segment of the market," said Carlyle CEO Kewsong Lee.

Carlyle's corporate private equity strategy saw inflows totaling $16.1 billion in 2021. Halfway through 2022, it has raised $5.8 billion, just over one-third of last year's total.

Read more about Carlyle's second-quarter earnings report.

CHART OF THE WEEK: Private equity's share of terminated M&A deals grows

⮞ Fifteen percent of terminated M&A deals in the second quarter involved private equity or venture capital, the highest rate in at least six quarters.

⮞ As recently as the third quarter of 2021, the rate was less than half as much, at just 6%.

⮞ It is not conclusive evidence that macroeconomic turbulence is making it harder for private equity to close M&A deals, but the data point is one to watch, said Cameron Joyce, deputy head of research insights at Preqin.

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