The latest research note from Preqin confirms the trend that limited partners (LP’s) are increasingly aiming to co-invest alongside General Partners (GPs). The survey said that 52% of investors plan to increase their co-investment activity in 2014, and 91% of GPs surveyed stated that up to half of the investors in their latest vehicle requested co-investment rights.
Driving the trend is a desire to tap potential higher returns and lower costs that co-investments can offer. Fund managers are not opposed and apparently see it as a way to build deeper relationships with LPs, despite the potential to slow down the closing of a transaction. “While on the whole fund managers expect to offer more co-investment opportunities in the year ahead, they will carefully select the investors that are offered such investments,” said Ignatius Fogarty, Head of Private Equity Products, and Preqin in a statement. (Image source: Preqin)