Co-investments are becoming an increasingly important way through which US institutional investors access private markets, according to latest Cerulli research.
As demand continues to grow, co-investment capabilities are no longer just options for asset managers—they are becoming standard expectations and a key driver for institutional engagement.
Within private markets, co-investments have emerged as a strong vehicle option for institutions seeking to close the gap between pooled fund structures and direct ownership. Cerulli found that a net 16% of asset owners expect to increase allocation to co-investments for the next 24 months (with 19% anticipating an increase, compared to just 3% expecting to decrease allocations).
Institutions are using co-investments not only to reduce fees, but also to gain direct visibility into deal-level underwriting and strengthen relationships with managers. According to Cerulli, asset managers reported that 42% of co-investment partnerships originated through direct asset owner relationships, and almost one-quarter (24%) through investment consultants and outsourced chief investment officers (OCIOs).
“Co-investment access is now part of the initial manager evaluation instead of being negotiated separately after a commitment is in,” said Gloria Pais, research analyst at Cerulli.
“Managers unable to offer it are narrowing their addressable limited partner universe, not as a future risk, but as a present reality.”
