Co-Investment Demands

Tier 1 LPs in the Middle East view funds primarily as deal-sourcing engines for their direct investment teams.

The Zero-Fee Squeeze

It is standard for an LP committing $100M to a fund to demand the right to invest another $50M-$100M directly into the fund's largest deals on a no-fee, no-carry basis.

Impact on GP Economics

While co-investments help managers take down larger deals without over-concentrating the main fund, managing these special purpose vehicles (SPVs) creates significant uncompensated legal and operational overhead.

Syndication Mechanics

GPs must establish a clear syndication protocol detailing how co-investment opportunities are allocated (e.g., pro-rata based on fund commitment) to avoid alienating other LPs.