Huge investors are now either acquiring stakes in companies or making partnership to make investment with private equity firms instead of investing their money in funds as they become tired of paying private equity fees.
This move poses challenge to the private equity industry worth $3 trillion wherein leading companies like Apax and KKR are controlling the way money are raised from investors in exchange for performance and management fees.
Buyout firms are spending less money from investors, marking it first in the history.
According to a survey by industry tracker Preqin, 43% of the participating investors are planning this year to raise money for investments to do deals alongside buyout companies without making payments for fees.
In response to this trend, some executives at private equity firms claim that the increasing rate of co-investment does not affect their business.
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