For years, co-investments sat on the sidelines of private markets. They were valuable, but largely viewed as an additional opportunity offered by fund managers to their largest or most strategic LPs.
That is changing.
Co-investment value reached $198.19 billion in the first half of 2026 alone, according to S&P Global Market Intelligence. That is already higher than the full-year total recorded in five of the previous six years and puts 2026 on track to potentially exceed the $253.01 billion recorded in 2025. Part of the reason is simple: private market deals are getting bigger.
AI has accelerated that trend. Supersized funding rounds increasingly require capital from multiple investors, including private equity firms, asset managers, sovereign wealth funds and other institutional investors. At the same time, investors themselves are looking for greater control over where their capital goes. The result is a private market that is becoming increasingly collaborative.
The rise of the megadeal
Private equity dealmaking reached $234.05 billion globally in the first half of 2026. Nearly 88% of that value came from transactions worth at least $1 billion, according to S&P Global Market Intelligence.
AI and related infrastructure have been important drivers. Asia-Pacific private equity activity excluding Japan, for example, more than doubled year over year in the first half of 2026, with AI applications, data centres and pure-play AI companies attracting capital across India, Southeast Asia and China. When transactions reach this scale, even large funds may not want to absorb an entire allocation themselves.
Co-investment provides another option. A fund manager can lead or participate in a transaction while allowing selected LPs or other investors to invest alongside the fund. This can help managers pursue larger opportunities without concentrating too much of the fund in a single investment.
For participating investors, it provides something equally valuable: more direct exposure.
Why investors want to go direct
The traditional fund model remains central to private markets. Investors gain diversification, professional management and access to a portfolio of opportunities without having to source and evaluate every transaction themselves.
But co-investments offer a different proposition. Instead of committing capital to a blind pool and leaving individual investment decisions entirely to the manager, investors can choose to participate in a particular company or transaction.
That can provide greater visibility into the underlying investment and more control over portfolio construction. Co-investments can also carry a lighter fee burden than traditional fund commitments, one of the factors S&P Global identifies as contributing to LP demand. This is why BlackRock described co-investments in its 2026 Private Markets Outlook as becoming a “cornerstone of portfolios” as investors seek greater control, transparency and cost efficiency.
But the shift is not simply about reducing fees. It reflects a broader change in how sophisticated private market investors want to participate.
Family offices are becoming dealmakers too
This shift is particularly interesting for family offices. Traditionally, a family office seeking private market exposure might allocate capital to several private equity or venture funds and allow those managers to source, execute and manage the underlying investments.
Today, some family offices are taking a more hands-on approach. As family offices professionalise, build internal investment teams and develop stronger relationships with founders, fund managers and other investors, they may encounter attractive opportunities directly. Once a family office has proprietary access to a deal, another possibility emerges: bringing other investors alongside them.
A family office might identify an opportunity, commit its own capital, and then invite other families, investors or members of its network to participate in the same transaction through a dedicated co-investment structure. In effect, the family office begins playing a role traditionally associated with a fund manager or syndicate lead. This does not mean every family office is becoming a direct investor. Building an internal investment capability requires resources, expertise and infrastructure, and the economics will not make sense for every office.
But the direction of travel is notable. UBS’s 2026 Global Family Office Report found that 60% of surveyed family offices planned changes to their strategic asset allocation over the following 12 months. AI was already an investment theme for 65% of respondents, rising to 88% among Southeast Asian family offices. As more families pursue thematic and private-market opportunities, the ability to act on direct access becomes increasingly relevant.
Co-investments are changing the GP-LP relationship
For fund managers, there is another reason co-investments matter. They can strengthen LP relationships. An LP may commit to a fund for diversified exposure to a manager’s strategy while selectively deploying additional capital into individual opportunities where it has particularly high conviction. The relationship therefore becomes more flexible: Fund commitment + selective direct exposure.
For managers, offering co-investment opportunities can deepen relationships with existing LPs and potentially make the overall fund proposition more attractive. S&P Global notes that managers increasingly recognise that offering co-investments may also encourage investors to become LPs in their funds. This creates a different relationship between managers and their investors. LPs are not necessarily passive sources of capital. In the right opportunities, they can become investment partners.
Access is only half the equation
There is, however, an important distinction between having access to a deal and being able to execute it. A family office might have an allocation in an attractive company. A fund manager might have additional capacity in a transaction. A syndicate lead might have investors ready to participate. Someone still needs to turn that opportunity into an investable structure. That can involve establishing an appropriate vehicle, onboarding multiple investors, completing KYC and AML requirements, collecting subscriptions, coordinating capital flows, maintaining records, handling reporting and eventually distributing proceeds. The complexity increases further when investors come from multiple jurisdictions.
This is where structures such as Special Purpose Vehicles (SPVs) have become particularly useful for co-investments. Rather than adding numerous investors directly to the underlying company’s cap table, participants can invest through a single vehicle. The SPV then makes the investment into the target company, while the participating investors hold interests in the SPV.
For a fund manager, this could mean creating a sidecar for LPs participating alongside the main fund. For a family office, it could mean bringing several trusted investors into an opportunity it has sourced. For a syndicate lead, it could mean aggregating a network of investors into a single transaction. The underlying principle is the same: one opportunity, multiple investors, one structured vehicle.
Direct investing still requires infrastructure
The appeal of co-investing is easy to understand. Investors can gain more control, potentially improve economics and build concentrated exposure to opportunities they understand well.
But going direct also means taking on responsibilities that a traditional fund manager would otherwise handle. Someone must source the opportunity, conduct diligence, negotiate terms, coordinate legal and tax considerations, manage investor communications, monitor the investment and ultimately navigate liquidity. That makes infrastructure increasingly important.
The most successful co-investment strategies are unlikely to be defined purely by who receives the most deal flow. They will also depend on who can evaluate opportunities quickly and execute them professionally when allocations become available. This matters particularly in competitive private markets, where access to sought-after companies can move quickly.
What happens next
The rise of co-investments is part of a broader evolution in private markets. Fund managers are using them to pursue larger transactions and deepen LP relationships. Institutional investors are using them to gain more targeted exposure and greater control over portfolio construction. Family offices with proprietary access can use similar structures to invest alongside their networks. At the same time, megadeals, AI investment and longer private-company lifecycles are creating more situations where large amounts of capital need to come together around individual opportunities.
Traditional funds are not disappearing. Nor should every investor suddenly become a direct dealmaker. Instead, the boundaries between LP, co-investor, syndicate lead and direct investor are becoming more fluid. The question is no longer simply whether investors want access to co-investments. Increasingly, it is whether they have the relationships, diligence capabilities and infrastructure to execute them well.
Because in the next phase of private markets, some of the most interesting opportunities may not be funded by one investor alone. They will be built together.