Private Equity Co-Investments: A Closer Look at an Evolving Landscape

Private equity co-investments can outperform parent funds, but the outcome depends more on deal selection, GP quality and loss history than on fee savings or sector-specialist labels.

• GSAM analyses 236 actionable buyout co-investment opportunities from 135 managers presented between 2015 and 2022, using ongoing third-party GP reporting received by its External Investing Group.
• Co-investments generated an average net MOIC of 2.11x, versus lower results for parent funds and the broader Cambridge Private Equity Fund Universe; at the 75th percentile, the comparison was 2.73x versus 2.06x for parent funds.
• Performance was highly dispersed: 58% of co-investments outperformed their parent fund, while the spread between the 25th and 75th percentiles was more than twice as wide as for net fund returns.
• Generalist GPs produced a slightly higher median net MOIC than specialists, 1.79x versus 1.75x, and lower overall volatility; among the 50 deals achieving at least 3.0x, 48% came from generalists and 52% from specialists.
• GP loss ratios were grouped into low, medium and high bands at below 10%, 10–20% and above 20% of capital lost; co-investments alongside low-loss GPs delivered stronger average returns with less volatility, whereas medium- and high-loss groups were more unpredictable.

Takeaway: LPs should treat co-investing as a selective underwriting exercise rather than a simple fee-saving strategy, prioritizing deal-level analysis, GP evaluation, loss history and disciplined diversification; the conclusions remain subject to the dataset’s GSAM-specific coverage and relatively small subsamples in some sectors and vintages.