In investment management there is a problem as old as the trade itself: the person deciding where the money goes is not always the person putting it in. The manager earns fees for managing; the investor bears the risk of that management going well or badly. When the incentives of the two do not coincide, the conflict is served, even if nobody says it out loud.
Our answer to that problem is simple and verifiable: we invest our own capital, with a minimum of 5%, in every vehicle we launch. Not in some. In all of them.
What changes when the manager puts money in
Co-investment is not a marketing detail. It changes how decisions are made because it changes what the manager stands to lose:
- Deal selection. When part of your own capital is at stake, the discipline to reject a mediocre deal is far greater. The bias towards "making the numbers work" to close stops paying off.
- Risk management. A co-invested manager does not seek to maximise assets under management, but to protect the capital they themselves have committed over the entire life of the asset.
- Time horizon. Interests are aligned in time too: a premature exit that triggers fees is of no interest if it hurts the shared final return.
We do not ask the investor to trust our judgement. We ask them to look at where we put our own money.
Alignment, not promise
The difference between trust and alignment is the difference between a promise and a fact. A promise can be broken at no cost; alignment has real consequences, because the manager suffers the same losses and enjoys the same gains as the investor they represent.
That is why we say we do not sell returns: we explain how we build them, with their assumptions and risks, and let the investor decide with full information. We have already decided before them, putting our own capital into the same deal. It is the starting point for everything else.