Co-investing has become one of the most discussed issues between private equity funds, also known as general partners (GPs), and their investors, commonly referred to as limited partners (LPs).

Executive Summary

Kemper's Nathan Harnetiaux explains the basics of co-investing and highlights some of the unique challenges that new entrants should consider before starting their own co-investment programs. Kemper has built a co-investment platform to enhance returns and gain access to information that might otherwise be unavailable to investors in private equity funds, he says.

For those unfamiliar with co-investing, it is an opportunity for LPs to invest directly in a deal sourced by a GP, rather than through a comingled fund. This investment could be structured as debt, equity or some combination of the two depending upon the GP’s strategy and expertise.

At Kemper, we are big proponents of co-investing and have built a robust co-investment platform as we believe it enhances our returns and provides market information that we would not normally receive. However, this type of investing comes with its own unique characteristics and challenges that new entrants should carefully consider before starting their own program.

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