Private equity special report: Co-investing

Co-investing has gone on for a long time but currently appears to be growing very rapidly. It may very well be changing the industry – but, obviously, there is no role for independent governance in a co-investment because the LPs are effectively in the driving seat. However platforms are being built to allow smaller LPs to get in on co-investment opportunities as a group. In these situations some form of independent governance would be a good idea.

Co-investing is growing quickly and is clearly very profitable for the private equity houses and large LPs, although it carries some risks too. If it continues to grow at the present rate there is danger that private equity investors who are not participating in these arrangements will increasingly come to be treated as second class citizens. The best deals will be left for the largest institutions acting in partnership with the world’s largest PE houses. Private equity funds could become vehicles for the little people.

To read more on this story see the December issue of The NED.