Co-investments per se are not an own type of asset class but a strategy. Co-investments acquire minority stakes of an investment. They can be found at Private Equity, Private Debt, Infrastructure and Real Estates investments. A lead investor supervises the investment such that the co-investor can minimize its own supervision of the investment. The co-investor gets in return for its stake a share of the profit. A LP can typically get co-investment rights in a fund when she commits a certain amount to the fund. Thus, a LP earns the right to become a co-investor in every deal the fund is doing.
In contrast to a simple commitment to the fund, the co-investor gets more transparency and control about the investment. Moreover, she gets presented a couple of deals and thus can save on its own deal sourcing. In addition, the fees are typically lower when an investor becomes a co-investor. The advantage for the GP is that she can realize deals that she could not realize with the fund alone. Such deals can also help to improve the relationship between the LP and GP, which can be helpful for future investments.
According to a survey by Preqin in 2014, around 52% of LPs who were asked about their performance of their co-investments answered, that these investments performed significantly better than their normal fund investments.