Co-investments Hold Promising Potential For PE: Preqin

2014 is set to witness an increase in co-investment activity, with 52% of LPs and 31% of GPs intending to ramp up their operations in this sector, according to a recent Preqin study.

However, the study cautions the high expense of co-investments and competition in the landscape could act as deterrents to those who express an initial interest.

Gaining prominence

The Preqin’s report highlights co-investments are passive, non-controlling investments, a provision of separate equity that is often not subject to fees. Despite carrying a greater level of risk and complexity, co-investments bring a myriad of benefits to both the investor and fund manager. Some of the benefits include better returns, diversification of portfolio, and better alignment of interests between partners and...