Co-Investments of Sovereign Wealth Funds in Private Equity
Direct investments are the preferred vehicle for large institutional investors to have control over their portfolio investments. In a recent study, F. Alexander de Roode (Robeco Asset Management) and Prof. Joseph McCahery (Tilburg University) study the deal structure of direct investments by sovereign wealth funds (SWFs) in private equity transactions.
They find that SWFs shift from investing in private equity funds to originating and co-investing together with private equity funds in deals. The choice for co-investment affects deal size, risk-bearing, fees and returns.
Overall, their results show the strong interest of SWFs in direct investments in developed markets.