Merlin IV co-investment fund closes at $1 Billion, strengthening Partners Capital’s private equity strategy

Partners Capital Investment Group, a global investment firm with more than $70 billion in assets under management, has completed the final close of its Merlin IV co-investment fund, securing over $1 billion in commitments from investors across North America, Europe, Asia, and Africa. The fund is the fourth and largest vehicle within the firm’s private equity co-investment platform and is designed to provide direct capital for single-asset buyouts alongside established private equity sponsors.

Partners Capital says this raise reflects strong investor demand for co-investment strategies that offer speed and certainty in competitive deal environments, especially in the lower-middle and middle market segments where timely commitments are crucial.

Inside the $1bn co-investment fund

Partners Capital’s Merlin co-investment strategy involves partnering with experienced private equity managers to invest equity directly into individual transactions rather than through traditional blind-pool funds. This approach gives investors direct exposure to specific deals, often with more transparency and control than they might have in larger diversified funds. The strategy typically co-invests $25 million to over $100 million per transaction alongside sponsors, helping close deals quickly and with certainty.

Investors in Merlin IV include a broad mix of global family offices and institutional allocators. Their participation signals that many sophisticated investors see co-investment vehicles as a way to enhance returns while managing risk amid competitive private markets.

Partners Capital executives emphasized that Merlin IV positions the firm to be a more significant capital partner for private equity sponsors. By acting as either a co-lead investor or a co-underwriter, it can help sponsors execute transactions that require meaningful, reliable capital at pace.

Building closer alignment with investors

The Merlin platform was first introduced in 2019, and since then Partners Capital has deployed more than $2 billion across over 60 individual transactions covering various industries and geographies. This history shows gradual scaling and refinement of the co-investment strategy, with Merlin IV now representing the largest single vehicle ever raised under the platform.

Co-investment has become an important element of the broader private equity landscape because it allows limited partners (LPs) to invest capital alongside top-tier sponsors in specific deals they find attractive, rather than allocating to broad funds where they have less visibility.

In competitive buyout markets these commitments can help sponsors close deals more efficiently, which many sponsors view as a competitive advantage. For Partners Capital, building deeper relationships with private equity sponsors through Merlin may also create new sourcing opportunities for future co-investments and tailored mandates that align with client objectives.

Understanding the co-investment model

A co-investment is when a non-sponsor investor (like an institutional LP or family office) invests directly alongside a private equity general partner (GP) in a specific deal. This contrasts with investing in a blind-pool fund where the investor commits capital without knowing the exact future investments.

The appeal of co-investments historically includes lower or no management fees and carried interest, more transparency into the assets, and the potential for enhanced returns relative to traditional fund commitments. Co-investments can be complex because they require investors to evaluate individual deals quickly and commit capital on a compressed timeline.

For many institutional allocators, participating in select co-investments is a complementary strategy alongside broader commitments to diversified private equity funds. It allows them to increase exposure to top managers while maintaining selectivity over specific assets.

The successful closing of Merlin IV with over $1 billion in investor commitments demonstrates Partners Capital’s ability to scale its co-investment platform and attract global capital to direct private equity opportunities. By focusing on targeted, single-asset transactions in the lower-middle and middle markets, the firm positions itself as a strategic, reliable capital partner for private equity sponsors and allocators seeking more control and alignment in private market investments. The growth of the Merlin platform reflects broader investor interest in co-investment strategies as tools to enhance return potential while managing costs and transparency.