Co-Investment - LP Direct Participation Alongside Fund
Recording the fund's investment in a portfolio company where LPs are also investing directly alongside the fund (co-investment), and the fund books only its own allocated portion.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Investments at Fair Value - Portfolio Company G (Fund Share) | Asset (+) | 20,000,000.00 | - |
| Cash & Cash Equivalents | Asset (-) | - | 20,000,000.00 |
💡 Accountant's Note
In a co-investment, the fund invests its allocated portion while select LPs invest additional capital directly into the same portfolio company via a separate co-investment vehicle (typically at reduced or zero management fee and carry). The fund books only its own share — the LP co-investment vehicle is a separate entity not consolidated into the fund's financial statements.
Practitioner & Systems Framework
💻 ERP Architecture
Set up the co-investment vehicle as a separate fund/entity in the portfolio accounting system. The fund and co-invest vehicle hold securities in the same portfolio company but their financials are reported separately. Ensure pro-rata fair value marks are applied consistently across both vehicles.
⚠️ Audit Flags
Auditors verify the allocation of the investment between the fund and co-invest vehicle is fair and consistent with the LPA co-investment rights provisions. Any preferential allocation to favored LPs requires disclosure.
📄 Required Documentation
Co-investment side letter or LPA provisions, allocation memo from investment committee, co-invest vehicle subscription documents, portfolio company cap table showing fund vs. co-invest vehicle ownership.
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