# Direct deals set to overtake traditional PE funds

> Investors are shifting billions away from blind fund commitments toward deals they can see and model themselves.
- Title: Direct deals set to overtake traditional PE funds | Shortify
- Summary: Investors are shifting billions away from blind fund commitments toward deals they can see and model themselves. Private equity investors increasingly prefer…
- Keywords: private equity, co-investment, direct investments, lp-gp relations, capital allocation, houlihan lokey, pantheon, partners capital, fundraising, buyouts, europe, business
- Source: Yahoo Finance — https://finance.yahoo.com/markets/stocks/articles/co-investment-directs-eclipse-primary-112810718.html
- Published: 2026-09-16T11:28:10+00:00
- Read time: 1 min
- Topics: private equity, co-investment, direct investments, lp-gp relations, capital allocation, houlihan lokey, pantheon, partners capital, fundraising, buyouts, europe, business
## Direct deals poised to dominate
Investors expect PE direct investments and co-investments to become the largest capital source within five years, overtaking traditional fund investing.
## Record volumes expected in 2026
78% of surveyed investors expect combined direct and co-investment volumes to hit a record in 2026, surpassing the $215 billion reached last year.
## Visibility drives the shift
Investors prefer directs and co-investments because they can underwrite specific assets and model returns directly, unlike blind commitments to primary funds.
## Co-investors embrace variable carry
Nearly 75% of investors are willing to pay variable carry on co-investments tied to return thresholds, but directs buyers are more resistant, with only 46% accepting it.
## European co-investment funds surge
European co-investment funds have raised 6.3 billion euros so far this year, nearly matching all of last year's 7.2 billion euros, though the number of funds continues to decline.
## Mega-funds lead the way
Pantheon's co-investment fund raised $3.2 billion in July, while Partners Capital's Merlin IV closed with over $1 billion in commitments focused on mid-market buyouts.
## Key takeaway

Private equity investors increasingly prefer direct investments and co-investments over traditional funds because they can underwrite specific assets and model returns upfront, rather than committing capital blindly.