Financial sponsors continue to call on limited partners to help round out their equity commitments, says Christina Carroll, managing director, investment bank Stout Risius Ross. As a result, co-investing is becoming more popular as LPs look for opportunities to reduce fees and gain exposure to the transactions of private equity players. (Watch the video below.)
Direct investing by LPs, once prevalent in the 1980s, is making a comeback. As allocations to the asset class grew over time, the need for co-investment capital had diminished. But now, the dynamics of the asset class have changed. There are now more co-investment opportunities.