What does "co-investment" in private equity refer to?

Co-investment in private equity refers specifically to opportunities where limited partners (LPs) invest alongside a private equity fund in a particular deal or project. This arrangement allows LPs to put additional capital into specific investments that they believe have strong potential for returns, beyond what they have committed through their primary investment in the fund.

The essence of co-investment lies in the direct participation in an individual investment, rather than just through fund shares. It provides LPs with a chance to leverage their relationship with the general partner (GP) of the fund, giving them more insight into particular deals and the ability to increase their exposure to favorable investment opportunities without bearing the full risk of a standalone investment.

Understanding the co-investment structure is crucial for LPs aiming to enhance their investment returns and diversify their portfolios more selectively. This opportunity can also strengthen the relationship between LPs and GPs, as direct investment aligns interests and facilitates deeper involvement in successful business ventures.

The other choices present different concepts related to fund investment strategies or practices but do not encapsulate the specific nature of co-investment. For instance, investing in multiple funds simultaneously describes a broader investment strategy, pooling funds with other investors refers to collective investing but not necessarily in specific deals, and the standardization of