Co-Investments in Private Equity: Do Investor Types Matter?

Abstract

This paper utilizes detailed data from a Northern European private equity fund-of-funds to examine the determinants of co-investments. Unlike prior studies, we differentiate between two distinct types of co-investors: sidecar co-investors and direct co-investors. This distinction matters. Both types are more likely to participate in larger deals, but the effect is notably stronger for sidecar co-investments. Furthermore, if the internal funds available to a general partner (GP) are less than the initial capital used for the acquisition, a GP is more inclined to seek sidecar co-investors, while lower uncalled capital reduces the likelihood of co-investment offers.