Great Fund Insights: Co-Investing 101: shared risk, shared reward | A&O Shearman

A challenging fundraising environment, the rise in M&A activity and the capital requirements necessary to bridge funding gaps are key developments which have led fund managers to increase their offering of co-investment opportunities, while simultaneously using these co-investments to bolster their relationships with existing and new investors.

The resulting trend is that a significant proportion of investors are now participating in blind-pool funds primarily to gain access to co-investment opportunities. This underscores the growing importance of distinguishing what co-investment structures and their terms consist of, in order to successfully avail of the returns and economics as an investor, and to maintain control over the allocation of capital as a manager.