Private equity’s record fundraising spree is beginning to fatigue investors, a limited partner tells me. General partners are tapping investors for funds as frequently as 18 months after the most recent ask, the source said, raising the prospect of smaller re-ups or even outright refusals.

The anecdote puts a new spin on the industry’s move to diversify its sources of capital, suggesting that private equity’s drive toward new investors could be spurred in part by the tightening purse strings of its core LP base. While funds are still regularly exceeding fundraising targets, the time spent on the road raising funds is creeping higher. Managers spent 16 months on the road to close funds through the first three quarters of 2021, the highest length, on average, since 2013, according to Preqin data.

LP fatigue also highlights a possibly related phenomenon—investors seeking to diversify their fund managers.

For context, however, there’s still plenty of capital clamoring for the asset class, and investor fatigue is likely to hit certain types of allocators harder than others. Only family offices were above target allocation to private equity through the first three quarters of 2021, at a median level of 4 percent over.

Many others have room to grow their exposure. The median public pension fund committed 6 percent to the asset class versus a 7.5 percent target in 2021 through October according to Preqin, with similar shortfalls among insurers, endowments, wealth managers and sovereign wealth funds. Preqin data shows banks below target PE allocation to the tune of 4.4 percent, corporate investors by 14.5 percent and government agencies by 8.7 percent.

General partners might be well served by diversifying their investor base, however, as certain LPs near allocation targets.

Brandon Zero