You asked: What does co investment mean?

What is the meaning of co-investment?

Broadly, a co-investment is an investment in a specific transaction made by limited partners (LPs) of a main private equity (PE) fund alongside, but not through, such main PE fund. This is often accomplished through a separately structured co-investment vehicle which is governed by a separate set of agreements.

How does a co-investment work?

In a typical co-investment fund, the investor pays a fund sponsor or general partner (GP) with whom the investor has a well-defined private equity partnership. … Co-investments avoid typical limited partnership (LP) and general (GP) funds by investing directly in a company.

What is a co-investment in real estate?

When purchasing a property via home co-investing, buyers make a minimum initial investment in a home, similar to a down payment. Then a partner company co-invests, covering the remaining cost of the home. Payments are usually fixed for a set term and purchase equity back from the co-investing company along the way.

What are co-investment opportunities?

A co-investment opportunity is an invitation to invest alongside a fund manager’s private fund (the “Main Fund”) in a specific underlying portfolio company. … Co-investments are typically offered on a discretionary basis, allowing the selected co-investors to opt in or out of the opportunity.

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Can fund of Funds Co invest?

a fund-of-funds provides investors with exposure to hundreds of underlying companies, co-investing involves investing directly into a single company.

What is joint investment?

A joint investment account means two people have control of the investment account. Both parties can view their account and transactions and can make deposits and withdrawals as they wish. Equal access to the account means that both parties should trust each other implicitly.

What is PE carry?

Carried Interest or simply “carry” is incentive compensation provided to private equity fund managers to align their interests with the fund’s capital-providing investors. … Carry typically averages about 20% of the fund’s profits and ranges from as high as 50% in exceptional cases to as low as in the single digits.

What is a direct co-investment?

It is a way to execute a direct investment. Co-investing — a subset of direct investing, when an investor invests alongside a lead Sponsor to purchase ownership directly in an operating company. On every deal, a leading party sources, structures, and executes the transaction.

What is equity carry?

The private equity carry (or simply “carry”) is performance compensation that the partners of a private equity fund receive if they exceed a specific threshold return. This compensation is meant to align the private equiteers with their capital providers, as the majority of their compensation comes from the carry.

What is GP in private equity?

In the context of private equity (PE), the general partner, or GP, refers to the PE firm that manages a private equity fund. These funds are usually set up as general partnerships with the third party investors being the limited partners and the PE firm acting as the GP.

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Why do LP investors typically seek co-investment rights with a GP?

It’s an increasingly popular strategy as LPs look to take more active roles in the PE asset class, and as GPs look to share more risk and capital related to deals — while strengthening their relationships with LPs. … Howe says he likes co-investments because they allow him to invest in a more strategic way.

What is an alternative investment fund types?

Alternative investments can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts. Real estate is also often classified as an alternative investment.

What are GP-led secondaries?

GP-led secondary transactions typically take the form of either LP tender offers or fund restructurings. In an LP tender offer, a secondary buyer acquires certain LP interests in an existing fund.

What are co investments and secondaries?

Co-investments and secondaries help investors to target high quality assets. … Secondaries, in particular GP-led transactions, give incoming investors the ability to invest alongside GPs in a select group of companies in their fund portfolio.