Explanation

Co-investing in private equity refers to the practice where limited partners (LPs) invest directly in portfolio companies alongside the private equity fund, rather than just investing in the fund itself. This is distinct from simply being a limited partner in a fund.

Let's analyze each option:

Option A: participating in an investment fund alongside the general partner.

• This describes being a limited partner in a fund, not co-investing. Limited partners invest in the fund alongside the general partner, but this is not unique to co-investing.

Option B: participating in an investment fund alongside other limited partners.

• This again describes being a limited partner in a fund, which is the standard private equity investment structure, not co-investing.

Option C: making an investment alongside a fund in a deal the fund has identified.

• This correctly describes co-investing. In co-investing, limited partners invest directly in specific portfolio companies alongside the fund, typically in deals that the fund has sourced and structured. This allows LPs to invest additional capital beyond their fund commitment and potentially avoid some of the fund's management fees and carried interest on that portion of the investment.

Key features of co-investing:

1. Direct investment in portfolio companies (not just in the fund)
2. Investment is made alongside the fund
3. The fund typically identifies and structures the deal
4. Co-investors usually pay lower or no management fees on the co-investment portion
5. Co-investment rights are often negotiated as part of the limited partnership agreement

Therefore, Option C is the correct answer as it uniquely describes the co-investing method.