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.