Co-investments have become essential in private equity, allowing general partners to enhance portfolios, build relationships with limited partners, and mitigate risk. Approximately 70% of limited partners now expect these opportunities from fund managers, showcasing the maturation of this market. The demand for co-investments spans various investor types, including family offices and foundations. They can pose management challenges but, when effectively integrated, allow for greater flexibility, resilience, and alignment with LPs without compromising fund governance.
In private equity, the smartest general partners are realizing that co-investments aren't just a fundraising sweetener; they're a strategic lever that strengthens portfolios.
The co-investment market has matured rapidly over the past decade, with nearly 70% of LPs now expecting co-investment opportunities from their fund managers.
While co-investments can strain internal resources, when built into a fund's operations from day one, they enhance portfolio flexibility and reduce concentration risk.
Sophisticated firms use co-investing not just to raise capital but to build resilient portfolios and ensure tighter alignment with limited partners.
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