ADUSA

Blended IRR Co-Invest Calculator

Middle Eastern institutional allocators heavily utilize co-investments to average down the "fee drag" of traditional 2-and-20 fund structures. Use this tool to model the net IRR impact of blending a main fund commitment with a fee-free, carry-free direct co-investment.

Assumptions

Main Fund Commitment ($M)

Co-Invest Commitment ($M) 0/0 fee structure

Expected Gross MOIC (Years 1-5)

Main Fund Fee Drag (%)

Estimated reduction from Gross to Net IRR in the main fund (typically 500-700 bps).

Results

Total Deployed

Fund Net IRR (est.)

Co-Invest Gross/Net IRR

Blended Net IRR

JavaScript Required: This interactive calculator requires JavaScript to function. To calculate manually, find the weighted average of the Net Fund IRR and Gross Co-Invest IRR based on capital deployed over a 5-year hold period.

Why this matters

If an Abu Dhabi sovereign wealth fund wants to hit a 15% net return hurdle, committing solely to a standard private equity fund makes this difficult due to the "J-curve" and heavy fee drag. By offering a 1:1 or 2:1 co-investment ratio alongside the main fund commitment, you allow the LP to deploy more capital efficiently, blending down the effective management fee and carried interest paid.

Ensure you reference your Co-Investment Structure clearly when pitching.