Co-investment

What is co-investment?

Co-investment is a strategy in which several investors join forces to jointly finance a project or asset. This method is particularly used in sectors such as private equity, real estate or infrastructure. In addition to collaborations initiated by a main investor, often a fund or a management company, there are Club Deals. The latter are made up of freelancers or companies that do not specialize in fund management, offering a more flexible and autonomous approach.

How co-investment works

A lead investor identifies an opportunity and offers other partners the opportunity to participate. The latter, sometimes called “co-investors”, provide additional capital, thus making it possible to raise the funds necessary to finance the project.

In the context of this type of investment, it is common to use a SPV (Special Purpose Vehicle), a company created specifically to structure the operation. Investors do not become direct owners of the underlying asset, but they own shares in this intermediary company. This structure facilitates asset management, the distribution of rights between participants and ensures greater transparency.

These associations often take place in parallel with a main fund, but offer participants specific conditions, such as reduced fees or direct involvement in the project.

Benefits of co-investing

• Access to exclusive opportunities: Participants can invest in projects or assets that are usually reserved for large institutional investors.
• Cost reduction: Compared to a traditional investment via a fund, management fees are often lower, as they do not go through intermediaries.
• Risk sharing: The participants spread the financial risks associated with the project.
• Diversification: This approach makes it possible to extend investments to several projects or assets, thus reducing exposure to a single one.
• Structural simplicity thanks to SPVs: The creation of an SPV allows centralized asset management and a clear distribution of rights and responsibilities.

Application example

As part of a real estate acquisition, a management company identifies a high-value building and invites its partners to join the operation. An SPV is created to structure the investment. Each participant owns a share in this company, which owns the building. The income generated by renting or reselling is then redistributed to investors in proportion to their holdings.

Whether it is a project led by a main investor or a Club Deal, this strategy offers participants an opportunity to optimize their resources while benefiting from strategic alignment with other investors. By combining capital and expertise, it maximizes the chances of success.

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