Co-investment: a private equity strategy attracting both institutional and private investors

Long perceived as a niche strategy, co-investment is now firmly embedded in the private equity ecosystem. While it still represents a relatively modest share of the overall private assets market, invested volumes continue to grow steadily worldwide. This structural trend is confirmed by Audrey Detavernier: “Co-investment is now clearly identified as an asset class in its own right.”

In practical terms, co-investment offers the opportunity to participate in a transaction alongside a private equity fund, under the same economic terms. Co-investors benefit from direct exposure to the underlying asset. Key advantages include lower management fees and carried interest directly linked to the performance of the investment, without any additional layers associated with intermediary structures. “Investors know they are directly financing the company’s performance,” analyses Audrey Detavernier. 

An approach that appeals to a broad range of investors

Today, this strategy attracts a broad investor base, encompassing both institutional and private investors. For institutional investors, co-investment is primarily seen as a fine-tuning allocation tool, enabling them to strengthen sector or geographic exposure, adjust portfolios, or build dedicated mandates. “Co-investment makes it possible to correct certain over- or under-exposures,” explains Audrey Detavernier. “We are also seeing a growing number of requests for tailor-made solutions designed to meet specific objectives.”

For private investors, co-investment opens up opportunities that were previously out of reach. Replicating this type of portfolio construction at an individual level is indeed challenging, given high entry tickets, limited access to top-tier managers, and demanding requirements in terms of selection and monitoring. The strategy also appeals thanks to its clarity, its tangible nature, and its close connection to the real economy. “Private investors, often entrepreneurs themselves, know exactly what they have invested in,” notes Audrey Detavernier.

Contrary to popular belief, this investor segment is not new to the ecosystem. “High-net-worth individuals were already present from the fourth generation of funds. In the most recent generation, they even account for 25% of subscribers.” However, their growing interest has led Ardian to innovate in terms of access formats: single-vintage funds with one capital call, evergreen funds, and deal-by-deal club programmes. “Private clients have very diverse constraints and expectations. Our dedicated formats provide them with greater visibility and simplified access to asset classes, depending on their objectives.”

The Ardian model: a distinctive three-pillar framework…

Convinced of the relevance of co-investment, Ardian launched its first generation of funds in 2005, at a time when this approach was still reserved for a small circle of institutional investors. Twenty years later, its platform has become a global benchmark. This positioning is built around a distinctive three-pillar approach: access to transactions, disciplined selection, and portfolio diversification.

Access is the cornerstone of the model. Ardian benefits from a unique positioning thanks to its integrated platform. “Through our primary and secondary investments, we are clients of more than 600 managers worldwide,” explains Audrey Detavernier. This privileged position gives Ardian access to leading transactions, often offered first to trusted partners.

However, access alone is not sufficient. Of the 250 to 300 opportunities received each year by Ardian’s teams, only 6% are ultimately selected. “Each transaction goes through two separate investment committees: that of the sponsor, followed by ours. We may disagree and decide not to proceed with the deal,” notes Audrey Detavernier. In line with Ardian’s DNA, the first and foremost filter is—and will remain—the human factor: the sponsor, the management team, and their operational execution capabilities.

The final pillar of the model is diversification. While a buyout fund typically invests in around ten companies, a co-investment fund generally targets five times as many. This level of granularity helps optimize the risk-return profile. “We invest across industrial companies as well as services, healthcare, technology and consumer goods. The objective is to deliver returns comparable to those of the best buyout funds, but with a more diversified risk profile,” summarizes Audrey Detavernier. 

…built on a dedicated international platform

Ardian’s Co-Investment activity relies on a fully dedicated team of around 25 professionals, based across four offices in Paris, New York, London and Hong Kong. “In line with Ardian’s multi-local strategy, teams are located as close as possible to our local sponsors, investments and clients,” explains Audrey Detavernier. A key strength of this organisation is its responsiveness, which is particularly critical in highly competitive processes with tight timelines. 

Scaling up ahead

Looking ahead, Audrey Detavernier notes that co-investment activity remains closely correlated with the LBO and M&A markets. “However, the expansion of our relationships with sponsors allows us to access a growing number of transactions,” she adds, while highlighting the resilience of performance in recent years.

Beyond transaction volumes, deal structures themselves are evolving. Bank leverage remains more constrained than before 2022, requiring funds to deploy more equity. 

In this context, Ardian anticipates a step change with its next generation of funds. Scheduled for the second half of 2026, it will target a size of between $3 and $3.5 billion, confirming the platform’s continued growth trajectory. “Twenty years after our beginnings, the fundamentals that have driven our success — access to the best transactions, rigorous selection and the power of diversification — remain fully relevant. Supported by market momentum, our platform is now particularly well positioned to access the best opportunities,” concludes Audrey Detavernier.