Key Takeaways
- • Future Standard says higher borrowing costs and a tougher fundraising market are creating fresh co-investment opportunities for private equity co-investors in the US middle market, as buyout firms increasingly turn to outside equity partners.
- • Global co-investment assets under management have grown nearly eightfold, from about $56 billion in 2010 to $425 billion in 2025, according to PitchBook.
- • The seven largest publicly traded alternative investment managers now account for nearly 30% of industry AUM, while the middle market remains highly fragmented.
- • Multi-manager co-investment funds offer institutions diversified private equity exposure at fees below traditional buyout funds, but carry less diversification than fund-of-funds and less control than direct commitments.
- • Future Standard, headquartered in Philadelphia with $94 billion in AUM as of end-June, is led by CEO Edwin Conway.
Summary
Higher borrowing costs and a tougher fundraising market are opening new opportunities for private equity co-investors in the US middle market, according to Future Standard. As buyout firms increasingly seek outside equity partners, co-investment has become a more attractive financing route. Benjamin Hur, managing director and co-head of the direct equity investment team at Future Standard, said at the ASK Global Alternative Investment Conference hosted by The Korea Economic Daily on Oct. 28 that "the current environment is particularly favorable for middle-market co-investing."
Elevated interest rates are forcing general partners to contribute more equity to transactions that once relied heavily on borrowed money. For limited partners, co-investments can extend fund deployment timelines over the investment period, provide access to individual buyout deals with greater vintage diversification, and deepen partnerships with GPs. Hur said GPs use co-investment as a strategic tool to build deeper relationships with their LP base.
According to PitchBook, global co-investment AUM grew from about $56 billion in 2010 to $425 billion in 2025. Hur noted that private capital concentration has intensified since 2020, with the seven largest publicly traded alternative managers accounting for nearly 30% of industry AUM. This consolidation intensifies competition for larger deals, while the middle market remains highly fragmented, creating a broad opportunity set.
Hur also said higher rates are shifting private equity returns away from leverage and multiple expansion toward earnings growth and operational improvements. He pointed to multi-manager co-investment funds as a way for institutions to diversify private equity exposure at lower fees than traditional buyout funds, while cautioning that these vehicles may offer less diversification than fund-of-funds and less control than direct commitments. Performance, he said, depends on the manager's ability to secure deal flow, assess transactions and select sponsors.
Future Standard, headquartered in Philadelphia, manages $94 billion in assets as of end-June, with more than 30 years of mid-market experience, over 550 investment professionals across 14 global offices, and more than 300 GP relationships. The firm is led by CEO Edwin Conway.
Elevated interest rates are forcing general partners to contribute more equity to transactions that once relied heavily on borrowed money. For limited partners, co-investments can extend fund deployment timelines over the investment period, provide access to individual buyout deals with greater vintage diversification, and deepen partnerships with GPs. Hur said GPs use co-investment as a strategic tool to build deeper relationships with their LP base.
According to PitchBook, global co-investment AUM grew from about $56 billion in 2010 to $425 billion in 2025. Hur noted that private capital concentration has intensified since 2020, with the seven largest publicly traded alternative managers accounting for nearly 30% of industry AUM. This consolidation intensifies competition for larger deals, while the middle market remains highly fragmented, creating a broad opportunity set.
Hur also said higher rates are shifting private equity returns away from leverage and multiple expansion toward earnings growth and operational improvements. He pointed to multi-manager co-investment funds as a way for institutions to diversify private equity exposure at lower fees than traditional buyout funds, while cautioning that these vehicles may offer less diversification than fund-of-funds and less control than direct commitments. Performance, he said, depends on the manager's ability to secure deal flow, assess transactions and select sponsors.
Future Standard, headquartered in Philadelphia, manages $94 billion in assets as of end-June, with more than 30 years of mid-market experience, over 550 investment professionals across 14 global offices, and more than 300 GP relationships. The firm is led by CEO Edwin Conway.
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