Key Takeaways
- • Private equity co-investment deal value more than doubled year-on-year to a record $198bn in the first half of 2026, according to S&P Global Market Intelligence data cited by the Financial Times.
- • Institutional investors are pursuing direct stakes alongside PE sponsors to reduce fees, gain control over capital deployment, and obtain concentrated company exposure.
- • Overall PE fundraising rose 5% to $312bn in H1 2026, though volumes remained below the 2021 peak.
- • The Pennsylvania Public School Employees' Retirement System ($86bn) estimates its co-investments outperformed its broader PE portfolio by roughly five to six percentage points, mainly from fee and carried-interest savings.
- • North Carolina's $150bn retirement system is expanding its co-investment allocation, including a $200m investment in Anthropic alongside Baillie Gifford earlier in 2026.
Summary
Institutional investors are increasingly investing directly in companies alongside private equity managers, using co-investments as an alternative to committing capital through traditional blind-pool funds, according to a report by the Financial Times. Citing S&P Global Market Intelligence, the report says the value of PE co-investment deals more than doubled year-on-year to a record $198bn in the first half of 2026.
The shift reflects investor demand for lower costs, greater control over capital deployment, and direct exposure to individual companies. It also comes as PE firms continue to struggle to generate liquidity through portfolio company exits. Overall private equity fundraising rose 5% to $312bn in the first six months of the year, but remained below its 2021 peak. Co-investments typically carry reduced or no management fees and carried interest, compared with the standard 2% management fee and 20% performance allocation of traditional funds, which is why they appeal to allocators seeking to improve net returns.
The Pennsylvania Public School Employees' Retirement System, which manages $86bn, estimates that its co-investments have outperformed its wider private equity portfolio by approximately five to six percentage points, largely because of savings on fees and carried interest. North Carolina's $150bn retirement system is also increasing its allocation to the strategy. The North Carolina Investment Authority invested $200m in artificial intelligence company Anthropic alongside Baillie Gifford earlier this year. The article notes that the position could return fivefold if Anthropic eventually lists at a $2tn valuation, a scenario that remains hypothetical.
The shift reflects investor demand for lower costs, greater control over capital deployment, and direct exposure to individual companies. It also comes as PE firms continue to struggle to generate liquidity through portfolio company exits. Overall private equity fundraising rose 5% to $312bn in the first six months of the year, but remained below its 2021 peak. Co-investments typically carry reduced or no management fees and carried interest, compared with the standard 2% management fee and 20% performance allocation of traditional funds, which is why they appeal to allocators seeking to improve net returns.
The Pennsylvania Public School Employees' Retirement System, which manages $86bn, estimates that its co-investments have outperformed its wider private equity portfolio by approximately five to six percentage points, largely because of savings on fees and carried interest. North Carolina's $150bn retirement system is also increasing its allocation to the strategy. The North Carolina Investment Authority invested $200m in artificial intelligence company Anthropic alongside Baillie Gifford earlier this year. The article notes that the position could return fivefold if Anthropic eventually lists at a $2tn valuation, a scenario that remains hypothetical.
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