Co-investment strategies for institutional investors

We work with hundreds of highly-rated asset managers around the world and are considered a trusted firm. We leverage these relationships to help you source and execute co-investment opportunities that are designed to help you achieve your overall investment objectives.

Help enhance your portfolio with co-investments

Co-investments offer several potential benefits such as lower fees, improved net returns, accelerated capital deployment (or J-curve mitigation) and diversification. They also provide the ability to control industry sector and geographic exposures directly, something that is more limited in primary private equity investing due to the blind-pool nature of traditional private equity funds.

However, equity co-investments also come with risks and other considerations that differ from private market fund investing. Our co-investments primer helps clients better understand the potential benefits, risks, implementation approaches and critical factors for considering co-investments.

We have extensive experience working in the co-investments market, both as a consultant and as a general or limited partner. We can leverage this experience, our global scale and established relationships to help you define a strategy aligned to your needs, source new deals and undertake due diligence reviews to help guide your decision making.

Five common co-investment approaches

There are various ways to implement co-investments into a private markets program. Investors who actively participate in co-investments typically use one of the following implementation approaches:
  1. Internally managed, with dedicated staff
    An internally managed co-investment program is the most cost-efficient option but also the most resource intensive. It requires an in-house dedicated co-investment team with the specialized skills needed to perform all necessary functions and established processes.
  2. Internally managed with guidance from an advisor
    A dedicated external resource assists your internal staff with due diligence, but, ultimately, you make the final investment decision. This is a lower-cost option in most circumstances, but it does require you to have your own general partner (GP) relationships and established internal decision-making processes to be able to move quickly when opportunities arise.
  3. Third-party co-investment manager/co-investment fund
    By investing in a third-party manager’s dedicated co-investment fund, investors can access co-investments with low administrative burden and internal resource requirements. However, this route includes an additional layer of fees for the external manager and does not give you discretion over investment decisions or the ability to tailor your portfolio.
  4. Fund-of-one or separately managed account

    You can create a fund-of-one or separately managed account (SMA) with a manager that has a co-investment team to source, screen, execute and monitor co-investments on your behalf. Compared to commingled co-investment funds, SMAs provide you with the ability to more closely align your co-investments with your wider investment strategy.

    You can set forth the objectives of the co-investment program (capital deployment pace, expected return, risk levels) and constraints (deal size, permitted geographies and industries) and determine your level of discretion over investment decisions, while having an external resource manage the vehicle and oversee the process.

  5. Overage or co-investment vehicles with manager 

    This method involves investing in a “sidecar” vehicle alongside a main private equity fund, managed by the same GP. This allows you to take an additional stake in certain portfolio companies on top of an allocation to the main fund.

    This option typically has advantageous fees, but you must rely on the manager to make the investment decisions and the investments are limited to the companies that are brought into the main portfolio.

Key considerations for co-investments

Why we believe clients choose us for co-investments

We have developed an extensive global network of longstanding relationships with highly-rated GPs and have positioned ourselves as a trusted firm.

We take a proactive approach with GPs to continuously source and access co-investment opportunities across strategies, sectors and geographies.

  • Experienced teams and tested processes
    Our specialized private markets and dedicated co-investments teams have the depth and breadth of experience necessary to source and access these co-investment opportunities. This experience is supported by efficient and effective commercial, legal and tax review processes that strengthen our ability to identify and evaluate transactions and execute within the GPs’ expectations and timelines.
  • Truly global co-investment sourcing capabilities
    We have an extensive global network of longstanding relationships with highly rated GPs from which we source co-investment deal flow.
  • Flexible approach to working
    Our dedicated team of experienced co-investment professionals can help you determine the right approach for implementing co-investments in your private markets program. We take a flexible approach to working with clients, offering various levels of co-investment support, commingled offerings and customized solutions to meet your specific needs.

Your introduction to co-investments

If you are new to the idea of co-investment, our primer can walk you through the potential benefits, risks, structures, and other considerations necessary before taking your first steps.
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