In recent years, more and more "co-investment vehicles", of all shapes and sizes, have been used in the Luxembourg alternative investment fund ("AIF") domain.

Their popularity can be explained by the fact that co-investments allow fund managers to fund larger deals without jeopardising contractual or legal fund diversification rules. By offering co-investment opportunities, fund managers can develop a privileged relationship with some (cornerstone) investors. Through co-investments, investors invest outside the fund structure, offering such investors direct exposure to one or more specific assets at no or reduced management fee and carried interest.