How do co-investment funds 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.
Can funds 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 a co investor in private equity?
An equity co-investment (or co-investment) is a minority investment, made directly into an operating company, alongside a financial sponsor or other private equity investor, in a leveraged buyout, recapitalization or growth capital transaction. In certain circumstances, venture capital firms may also seek co-investors.
Why do you think that GPs would allow or encourage their LPs to co invest alongside them?
GPs believe that co-investments provide a way for them expand and deepen their relationships with their LPs. Because co-investments can be attractive opportunities, GPs typically offer them preferentially to their fund investors (LPs), rather than broadly seeking co-investors.
What are hedge fund co-investments?
Co-investments are one-off investments that a hedge fund manager has identified which are typically too illiquid or oversized to absorb within the manager’s flagship fund. Motives behind managers offering co-investments are many.
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 the difference between secondaries and fund of funds?
Secondaries is more quantitative from a workflow perspective relative to fund of funds. When you value a fund, it requires a bottoms-up valuation of each private company within that fund and a financial analysis of a capitalization table.
What is hedge fund co-investment?
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. While co-investments have historically been offered by private equity fund managers, they may also be offered by hedge fund managers.
What is co-investment right?
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.
What is co-investing in real estate?
Co-investment is not a new concept in private real estate, but the practice whereby investors supplement fund commitments with external capital has never been as pervasive or as influential as it is today. Others are inquiring about co-investment possibilities without contributing to funds at all.
Who pays tax on joint investment?
According to the CRA, interest earned on a joint account requires proportionate tax reporting, where each owner of a joint account reports their individual portion of the total interest. In other words, taxes are paid on the interest according to how much each co-holder contributed to the account.