Until now, we have always excluded co-investment funds from our reported fundraising data.

One reason is that co-investment funds can be more challenging to track than the typical drawdown fund.

There are often cases where a press release about a successful fund closing will announce an amount inclusive of a co-investment vehicle, in which case, we may not be able to separate out the co-investment portion of the total.

 

Twenty years ago, co-investments tended to be one-off opportunities for GPs to top up the capital available for a deal.

LPs could invest, at their discretion, alongside GPs they had already entrusted with no management fees or carried interest, bringing down the total fee burden of their private funds program.

But this arrangement was not always convenient for LPs or GPs.

LPs with governance structures that operated on a quarterly cycle might not have been able to approve a co-investment decision required by the GP, and some did not feel that evaluating individual deals was a core strength of their staff.

GPs took a risk that a deal they had arranged might not get funded if enough LPs turned down the offer.

Thus was born the co-investment fund. These allowed LPs to get a lower (but not free) management fee and potentially a lower (but not free) performance fee, and GPs had the power to simply call co-investment capital rather than having to convince LPs to agree on a deal-by-deal basis.

Our data shows that most co-investment funds charge below 2% for the management fee and below 20% for the incentive fee.

Lastly, given the growth of co-investment fund AUM, we feel it is important to report on this dataset going forward.

For more data on co-investment funds and other strategies, read our new Global Private Market Fundraising Report.

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