Limited partnership agreements see more co-investments in Asia

Author: Karry Lai | Published: 30 Jan 2020

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...