Infrastructure Co-Investments – Institutional

Co-investments can provide LPs with the extra boost needed to achieve their portfolio goals. Gear up for infrastructure co-investments today and potentially see reduced J curve, faster deployment, fee reduction, and stronger LP & GP partnerships.

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Powering up portfolios with infrastructure co-investments

Co-investments can provide LPs with the extra boost needed to achieve their portfolio goals.

We explore how infrastructure co-investments can make a difference in investors’ portfolios. To achieve portfolio objectives in today’s macroeconomic landscape, investors must ‘gear up’ or otherwise get left behind.

Why infrastructure co-investments?

For LPs, co-investments can provide numerous potential benefits including return enhancement, faster deployment, fee reduction, and more deliberate portfolio construction. For GPs, co-investments can help manage fund diversification, engage likeminded partners to execute transactions, and provide funding for portfolio company growth.

LPs power up with…

- Alpha generation through active selection
- Deliberate portfolio construction
- Faster deployment and reduced fees

GPs power up with…

- Improved portfolio diversification
- Likeminded partners for deal execution
- Funding growth of portfolio companies

…deepening GP-LP partnerships through co-investments

LPs power up with…

- Alpha generation through active selection
- Deliberate portfolio construction
- Faster deployment and reduced fees

GPs power up with…

- Improved portfolio diversification
- Likeminded partners for deal execution
- Funding growth of portfolio companies

…deepening GP-LP partnerships through co-investments

Mitigating the J-curve

Sources: BlackRock, as of January 2025. For illustrative purposes only. 1) Analysis based on BlackRock’s internal historical performance data. Estimates assume an even and equal investment during a four-year period. All simulations are net of management fees and carried interest for both underlying managers and the primary/co-investment manager. Manager tools that often enhance IRR such as credit facility, asset leverage, and recycling are excluded from this analysis.

Co-investing has rapidly become one of the most sought-after strategies in private markets investing to mitigate the J-curve.

Faster deployment & return of capital

Co-investments can offer portfolio benefits by allowing investors to draw commitments faster. Additionally, LPs can invest at later stages of the investment, providing earlier visibility on the performance of the portfolio company, reducing exposure to early-stage value erosion, and enabling a faster return of capital.

Reduced fees

Furthermore, co-investments can often be negotiated on a fee-free or fee reduced basis. A diversified portfolio of co-investments and fund investments can help LPs blend down their overall fee burden, increasing net returns.

A recipe for success

Co-investing is a valuable tool in active portfolio management, allowing investors to potentially reduce the J-curve and enhance portfolio performance.

Successful co-investments require a broad skillset, robust expertise, strong execution capabilities, and deep resources to be able to identify growing sectors & geographies, meaningfully increase exposure to high-quality assets, back strong partners in their areas of expertise, and co-invest at attractive valuations.

Extensive relationships across the industry drive sourcing advantages, while scale provides leverage to negotiate the best terms. It is more important than ever to consider and balance the various ways one can access co-investments, by finding the right market, right asset, right sponsor at the right time and price.

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