Investing in the Manager or Investing with the Manager

What Family Offices Must Distinguish

A minority investment in an asset-management company, a commitment to one of its funds and a co-investment alongside it may share the same brand, but they are not the same investment.

The same manager can offer three different investments

Family offices are increasingly invited to participate in private markets through several channels at once. A family may be offered units in a private-equity or credit fund, an opportunity to invest directly in a portfolio company, and occasionally a minority interest in the asset-management business itself. The manager, investment team and brand may be the same, but the legal rights, sources of return, liquidity and conflicts are materially different.

The distinction became especially visible on 26 October 2026, when Apollo agreed to acquire a minority equity interest in Mubadala Capital. Apollo and other strategic investors are also expected to commit an aggregate $5 billion to Mubadala Capital strategies at the initial close. The official announcement separates the corporate ownership investment from the capital committed to the underlying investment products. Mubadala Capital will remain majority-owned by Mubadala, retain independent governance and continue to control its investment decisions. [Apollo and Mubadala Capital, 26 October 2026]

Reuters reported that Apollo’s interest was close to 10%, citing a person familiar with the transaction. Because the parties did not disclose the percentage or purchase price officially, those details remain reported rather than confirmed. For a family office, this is a useful discipline: the existence of a strategic relationship should not be confused with complete information about price, rights or expected returns. [Reuters, 26 October 2026]

Investing in the manager

An investment in the manager means acquiring shares or an economic interest in the asset-management company, its general partner or a related holding vehicle. The investor participates in the business that raises funds, earns management fees, may receive performance fees or carried interest, and may hold balance-sheet investments in its own products.

Industry analysis generally identifies three principal sources of value in minority GP-stakes investments: fee-related earnings, performance-related income and the manager’s balance-sheet interests. Fee income may be relatively recurring when the firm manages long-duration committed capital, but carry is uncertain, cyclical and dependent on successful exits. Balance-sheet investments introduce another layer of market and liquidity risk. [Preqin Global Private Equity Report, 2025]

The family is therefore underwriting a company, not only an investment strategy. The key questions include whether assets under management are retained, whether fundraising is repeatable, how dependent the franchise is on a small number of senior professionals, how carried interest is shared, and whether the manager can grow without weakening investment performance or culture.

Investing with the manager

A fund commitment is different. The family becomes a limited partner or unitholder in a defined vehicle with an investment mandate, term, fee structure and distribution waterfall. Returns depend mainly on the performance of the assets acquired by that vehicle after management fees, expenses and carried interest. The family normally has limited control over individual transactions and may be unable to redeem before the fund terminates.

A co-investment is different again. It provides exposure to a particular company, loan, property or infrastructure asset, often alongside the manager’s main fund. It may reduce the blended fee burden and provide greater transparency over the underlying asset, but it also increases concentration and requires the family office to evaluate the transaction within a shorter timetable.

Exposure | Primary return source | Typical control | Main risks
Manager equity | Management fees, carry and corporate growth | Shareholder rights depend on the transaction | Fundraising, talent, valuation and illiquidity
Fund commitment | Net performance of a diversified portfolio | Limited-partner protections and advisory rights | Asset performance, fees, leverage and long duration
Co-investment | Performance of a selected underlying asset | Deal-specific information and negotiated rights | Concentration, execution and adverse selection

A shared brand does not create identical alignment

Ownership in a manager can strengthen alignment, but it can also change incentives. A new shareholder may provide permanent capital, distribution capacity and institutional discipline. It may also increase pressure to grow assets under management, launch additional products or monetise fee streams. Faster corporate growth is not automatically positive for investors if it stretches the investment team, dilutes the strategy or creates pressure to deploy capital.

ILPA’s governance principles recommend that limited partners be informed when ownership of the management company changes and that the manager explain the rationale, the effect on long-term cash flows and any change to GP-level economics or carried-interest distribution. The broader lesson applies beyond private equity: fund investors need to understand how ownership changes affect people, incentives and decision authority. [ILPA Principles 3.0, June 2019]

Conflicts can also arise between the manager’s shareholders and its fund investors. The manager may allocate opportunities among several funds, co-investment vehicles and strategic accounts; charge different fees; transfer assets between related vehicles; or favour products that support corporate earnings. ILPA emphasises transparency, governance and alignment in cross-fund investments, fee allocation and co-investment policies. [ILPA Principles 3.0, June 2019]

The US Securities and Exchange Commission’s Division of Examinations similarly highlighted in June 2026 the importance of identifying economic incentives, accurately calculating fees and expenses, and maintaining policies and disclosures that address conflicts. Although the legal requirements differ by jurisdiction, the governance question is universal: who benefits economically from the recommendation being made? [US SEC Risk Alert, 9 June 2026]

Liquidity and valuation require different assumptions

A private fund is illiquid, but its life and distribution mechanics are usually defined in the limited partnership agreement. A co-investment may be realised when the specific asset is sold or refinanced. A minority interest in the manager may be even harder to exit because there may be no natural buyer, no public market and contractual restrictions on transfers.

Valuing the manager also requires assumptions that do not appear in ordinary fund analysis. The family must assess the durability of management fees, future fundraising, margins, carried-interest potential, compensation costs, ownership dilution and the valuation multiple applied to fee-related earnings. A strong historic fund track record does not, by itself, establish that the management company is attractively priced.

The reverse is also true. A well-run and valuable asset-management company may operate several products, only some of which suit the family’s objectives. Corporate quality should not replace fund-level due diligence on strategy, portfolio construction, leverage, valuation and liquidity.

Questions a family office should ask

Before investing in manager equity, the family office should establish:

·       Exactly which entity is being acquired and which revenues, assets and liabilities sit within it.

·       Whether the interest includes voting, information, pre-emption, tag-along or exit rights.

·       How management fees, carried interest and balance-sheet investments are divided among shareholders and employees.

·       How dependent the franchise is on key people and what happens if they leave.

·       Whether the transaction proceeds fund growth, provide liquidity to existing owners or both.

·       What transfer restrictions, valuation mechanisms and exit routes apply to the minority shareholder.

Before committing to a fund, the family office should separately establish:

·       The strategy, investment period, fund term, leverage limits and concentration rules.

·       The complete fee and expense burden, including related-party charges and offsets.

·       The allocation policy across funds, co-investments and strategic accounts.

·       The valuation process, reporting standard, audit arrangements and advisory-committee rights.

·       The key-person, removal, suspension and no-fault termination provisions.

·       How distributions, recycling, extensions and continuation vehicles may affect liquidity.

When each route may be appropriate

Manager equity may suit a family office with a long horizon, tolerance for illiquidity and the capability to underwrite an operating financial-services business. It is most compelling when the family has strong visibility into the manager’s economics, governance and succession, and when the valuation does not require unrealistic fundraising or exit assumptions.

A fund commitment may be more appropriate when the family wants delegated access to a defined strategy, portfolio diversification and a contractual governance framework without assuming the wider corporate risks of the manager. A co-investment may suit a family that has the sector expertise, decision speed and concentration capacity to analyse an individual transaction independently.

The three routes can coexist, but they should not be bundled into one decision. A strategic relationship may improve information and access, yet it can also create pressure to support future products. Each exposure should have its own investment memorandum, approval threshold, risk limit and performance benchmark.

Hauberk View

Family offices should stop treating the manager’s brand as the unit of analysis. The correct unit is the legal and economic exposure being purchased. Manager equity is an operating-company investment. A fund commitment is a portfolio mandate. A co-investment is a concentrated asset decision. The same institution may sponsor all three, but the family is buying different cash flows, accepting different governance rights and relying on different exit mechanisms.

The practical solution is to separate corporate due diligence from product due diligence. The investment committee should identify who earns each fee, who controls allocation, what happens when ownership changes, where conflicts are approved, and how the family can obtain liquidity. Strategic access is valuable only when the economics, governance and risks remain clear.

About Hauberk Capital: Hauberk Capital provides strategic perspectives focused on capital preservation, long-term wealth management and the evolving economic landscape of the Middle East and North Africa.

This article is provided for informational and educational purposes only. It does not constitute investment, legal or tax advice, an offer, or a recommendation to invest in any manager, fund or transaction. Families should review the relevant legal documents, governance arrangements and risks and obtain appropriate professional advice before making decisions.