After the Lehman collapse in 2008, the investment world changed significantly. Limited partners pulled back on their allocations to private equity, making it difficult for many private equity firms to raise new funds. The limited partners that eventually came back to the asset class did so demanding more transparency from portfolio managers, more control over the investments their private equity fund managers were making and a break on fund fees. To achieve these goals, several LPs launched co-investment vehicles to invest directly alongside their private equity portfolio managers.
As a result of this shift, an increasing number of limited partners are investing more capital directly into individual deals. According to a recent report from Preqin, “Preqin Special Report: LP Appetite for Private Equity Co-Investment,” 43 percent of limited partners are actively seeking co-investment opportunities. London Pensions Fund Authority, for example, completed its first co-investment in December 2013, while Canadian-based