Co-Investor

Definition of 'Co-Investor'

Although used loosely to describe any two parties that invest alongside each other in the same company, this term has a special meaning in relation to limited partners in a fund.

By having co-investment rights, a limited partner in a fund can invest directly in a company also backed by the fund managers itself.

In this way, the limited partner ends up with two separate stakes in one company; one, indirectly, through the private equity fund to which the limited partner has contributed; another, through its direct investment. Some private equity firms offer co-investment rights to encourage limited partners to invest in their funds.

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