Co-investments and are becoming increasingly common in
limited partnership agreements, according to speakers at the
Hong Kong Venture Capital Association’s Asia
Private Equity Forum in January. However, both limited partners
(LPs) and general partners (GPs) should be wary of some of the
terms in agreements, such as no default divorce clauses.
For China deals, while LPs still consider the terms from the
economic and governance perspective, increasingly they are
considering co-investment opportunities.
Co-investments allow the GP to invest in a portfolio that
exceeds the typical investment restrictions of a fund. "For the
participating LPs, it helps to establish their direct
investment track records, increase their exposure to a
selective number of portfolios, and reduce the overall fees and
costs attributable to such portfolio, as quite often
co-investments are made on a no-fee no-carry or low-fee
low-carry basis," said Daisy Shen, counsel at DLA Piper.
Most GPs do not want...