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<h1 class="text-4xl md:text-5xl font-bold mb-6">Direct Co-Investment Models</h1>
<p class="text-xl text-gray-600 mb-12">For Abu Dhabi institutional capital, the co-investment is no longer a perk; it is a structural requirement for deploying capital into US private markets.</p>

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    <h2>The Economics of Co-Investing</h2>
    <p>A standard US private equity fund charges a 2% management fee and 20% carried interest. Over a 10-year fund life, this creates significant <a href="/tools/fee-drag/">fee drag</a>. Sovereign wealth funds and <a href="/family-offices/">Family Offices</a> mitigate this by demanding co-investment rights—the ability to invest directly into specific deals alongside the main fund, typically at 0% fee and 0% carry.</p>

    <p>By blending a fee-paying fund commitment with fee-free direct investments, the LP achieves a much higher net IRR. You can model this math exactly using our <a href="/tools/irr-calculator/">Blended IRR Co-Invest Calculator</a>.</p>

    <h2>Common Syndication Structures</h2>

    <h3>1. The Syndicated SPV</h3>
    <p>The GP identifies an asset, commits capital from the main fund, and concurrently spins up an SPV to house LP co-investment capital. For Abu Dhabi capital, this SPV is increasingly domiciled using <a href="/adgm-structures/">ADGM Structuring</a> rather than Cayman, due to local familiarity and economic substance regulations.</p>

    <h3>2. Direct Cap Table Participation</h3>
    <p>In later-stage venture and growth equity (e.g., <a href="/guides/b2b-saas/">B2B SaaS</a>), sophisticated allocators like Mubadala may bypass the GP's SPV entirely and invest directly onto the target company's capitalization table. This requires the LP to have internal underwriting teams capable of moving at deal speed.</p>

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        <h3 class="mt-0 text-xl">The LP's Burden: Speed to Execution</h3>
        <p class="mb-0">The primary reason co-investments fail is the LP's inability to clear Investment Committee (IC) before the GP needs to close the deal. US sponsors must pre-clear co-invest documentation and understand the specific <a href="/us-deal-criteria/">US Deal Criteria</a> of the allocator months in advance.</p>
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    <h2>How to Pitch It</h2>
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        <li><strong>Define the Ratio:</strong> Be explicit. "For every $10M committed to the main fund, we guarantee $10M of priority co-investment capacity."</li>
        <li><strong>Model the Blended Rate:</strong> Show the IC exactly how the co-invest averages down the economics.</li>
        <li><strong>Tax Mitigation:</strong> Demonstrate that the co-invest vehicle protects them from US ECI/FIRPTA utilizing tools like our <a href="/tools/tax-withholding/">Tax Estimator</a>.</li>
    </ol>

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