coinvests

Coinvests, or co-investments, are investments made alongside an existing private markets fund in a specific deal. In private equity and venture capital, a lead fund identifies an opportunity and may invite qualified investors to invest additional capital directly in the deal, typically through a separate account or a special purpose vehicle. Coinvestors participate on terms negotiated for the deal, which may differ from those granted to the fund’s own limited partners.

Coinvestors often include existing limited partners, sovereign wealth funds, family offices, corporate venture arms, or high-net-worth individuals who seek exposure to a large deal or wish to maintain a targeted allocation without committing to a new fund vehicle. The arrangement can provide access to high-quality opportunities with potentially reduced or waived management fees and carried interest on the coinvested amount, though terms vary widely.

Governance rights are typically limited; coinvestors may receive restricted information or board observations but generally do not obtain the same governance rights as the fund. The main advantages are alignment of interests and fee efficiency, while risks include higher concentration risk, diligence burden, and term provisions that may favor the lead fund or other co-investors.

Coinvestments are common in private equity and venture capital, and have grown with the use of special purpose vehicles and dedicated co-investment platforms to manage liquidity, governance, and reporting.