Side Car Funds: Solutions for Sourcing Capital

Summary

This practice note explores ways in which private investment fund sponsors use side car funds to source additional capital and bolster their investment portfolios. These additional side car funds include annex funds, top-up funds, overage funds, and/or single investment co-investment funds. Each type of side car fund presents distinct advantages and disadvantages to sponsors and investors, and formation of any of these funds requires consideration and analysis from fund sponsors to ensure that side cars do not breach any of the fund sponsor's fund documents or related agreements with existing limited partners (LPs).