Co-investments are direct private market investments into a single company instead of a diversified blind pool portfolio, such as a primary private markets fund. Co-investments are made alongside the General Partner of a primary private markets fund, which is investing at the same time and on principally the same conditions.
Opportunities for co-investments arise when a private markets manager identifies an attractive transaction requiring its fund to invest more equity than its diversification or other limits allow. Rather than forego the opportunity, the fund manager syndicates the excess equity investment to the fund’s Limited Partners (LP) or other strategic investors.
Investors may be able to access these opportunities at reduced or even zero management or performance fees. This may result in higher net returns.
Co-investments may result in a private markets program reaching its targeted allocation sooner. In addition, upfront funding and potential fee savings may lower the J‑Curve effect.
Co-investments provide flexibility to target investments by strategy, geography, or deal size, which helps to achieve the desired allocation while providing diversification, depending on deal flow.
By working together on a specific project, the GP and LP may strengthen their understanding for each other, ultimately paving the way for future transactions.
We have been helping clients with co-investments for over 15 years. Talk to us to see how we could help you.
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The assets under advisement data (AUA Data) reported here include aggregated assets under advisement for Mercer Investments L LC and their affiliated companies globally (Mercer). The AUA Data have been derived from a variety of sources, including, but not limited to, third-party custodians or investment managers, regulatory filings, and client self-reported data. Mercer has not independently verified the AUA Data. Where available, the AUA Data are provided as of the date indicated (the Reporting Date). To the extent information was not available as of the Reporting Date; information from a date closest in time to the Reporting Date, which may be of a date more or less recent in time than the Reporting Date, was included in the AUA Data. The AUA Data include assets of clients that have engaged Mercer to provide ongoing advice, clients that have engaged Mercer to provide project-based services at any time within the 12-month period ending on the Reporting Date, as well as assets of clients that subscribe to Mercer’s Manager Research database delivered through the MercerInsight® platform as of the Reporting Date.
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