Riding shotgun: Co-investments are a hot item these days, but none more so than the sidecar
Co-investments, broadly speaking, have been around for about as long as business people have been shaking hands. But co-investments of the institutional variety — joint ventures and “clubs” — were usually limited to the biggest players with the deepest pockets and the most analytical horsepower. More recently, though, the sidecar rolled onto the scene and things began to change.
Sidecar co-investment structures enable passengers of more modest means — both managers and investors — to jump aboard, and tickets to ride in the new vehicle are becoming a hot item.
When a deal is too good to pass up, but too big for comfort, co-investments offer a solution. Sidecars come into play when a commingled fund and its investors jointly acquire an asset that the fund cannot afford to acquire alone. Sidecars can therefore create new opportunities for investors with smaller chunks of available capital.
Both managers and investors use sidecars and other