Co‑investments have become an important component of the private funds industry as they provide fund managers with additional capital to fund larger deals and a means to induce LPs to commit to future commingled funds. For their part, LPs are eager to participate in co‑investments to increase their exposure to private assets, with the added benefit of lowering their dollar cost average via the no-fee, no-carry structure typical of co‑investments. The rise of co‑investments has resulted in a concomitant – or larger – increase in the use of equity commitment letters (ECLs) between sponsors and co‑investors, which introduce certain risks that both parties must consider. This first article in a two-part series explores the growing use of ECLs in the context of co‑investments; their risks and benefits for both parties; and key considerations involved in structuring and signing them. The second article will offer an overview of key terms in ECLs for co‑investments and trends in how parties are negotiating them. See our two-part series on co‑investments: “Key Drivers, Unique Fund Structures and Alternative Approaches” (Aug. 22, 2024); and “Offering Process, Key Fund Terms and Regulatory Considerations” (Sep. 5, 2024).