Knowledge
How LPs invest directly alongside the fund in a single deal — why they do it, where the SPV sits, and how it complicates the cap table.
Last updated 4 July 2026
In brief: A co-investment vehicle lets selected LPs put money directly into a specific deal, alongside the main fund, usually with reduced or no fees and carry. The co-invest SPV sits parallel to the fund's own holding company and feeds into the same TopCo — which means the cap table has two ownership lines into one company, each with its own economics.
Co-investment is when one or more limited partners invest directly into a single portfolio company, alongside the fund that sourced the deal, rather than only through their commitment to the blind-pool fund. If a target needs a larger equity cheque than the fund wants to write alone, the general partner (GP) may offer the excess to particular LPs as a co-investment opportunity.
The attraction for LPs is largely economic. Co-investments are typically offered on reduced or zero management fees and carried interest, so an LP that co-invests lowers its blended cost of exposure to the deal. It also lets the LP concentrate capital in situations it particularly likes.
For the GP, co-investment allows a larger transaction than the fund could support on its own, helps manage concentration limits within the fund, and deepens relationships with key LPs — who often regard co-investment access as a condition of committing to the main fund.
In a typical PE fund structure, the fund invests down through a chain of holding entities. A co-investment vehicle — usually a dedicated SPV — sits parallel to the fund's own holding company (the LuxCo), and both feed their capital into the same TopCo. The result is two ownership lines converging on one portfolio company.
The co-invest SPV subscribes for the same mix of instruments as the fund's LuxCo — ordinary shares, preference shares and shareholder loans — in proportion to its share of the total equity cheque. Its investors are the co-investing LPs, who may hold directly or through their own nominee arrangements.
Co-investment turns a single ownership path into several. A cap table for the TopCo must now:
The reconciliation trap. When co-investment is tracked in a separate workbook from the fund's own holding, the two can drift — a transfer recorded in one and not the other leaves the TopCo cap table failing to foot. Holding both lines in one transaction register avoids that class of error entirely.
Because CapTab models every holder as a series of transactions against instrument classes, a co-invest SPV is simply another investor entity subscribing for the same instruments — its ownership, accrued interest and look-through economics roll up through the structure alongside the fund's, and the TopCo cap table reconciles across both. Co-investment vehicles are frequently domiciled in the same jurisdiction as the rest of the structure; see Luxembourg fund structures for why.