News & Events

In the second part of the series, Corporate Partner David Greene was quoted by Private Equity Law Report in an article titled, “The Co‑Investment Continuum: Structures That Give GPs More Control and Discretion (Part Two of Two).” This second article outlines direct and indirect co‑investment structures that afford LPs more discretion on which investment opportunities they pursue or bypass.

One approach PE sponsors can employ for co-investment opportunities is by using pledge funds, which involve a soft investor commitment to the fund that affords LPs flexibility to join investment opportunities at their discretion. With pledge funds, GPs usually have some protections, as investors are penalized or removed from the fund if they forgo too many investments. However, as pledge funds can complicate the process for GPs, they are not utilized often. David notes “[i]t can be a useful tool, but it can divert time and attention away from the main fund negotiation, which is what everyone’s focused on. That attention can be difficult to justify for an ancillary product when there might not yet be a deal to co‑invest.”

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