USA – TEXAS Trends and Developments Contributed by: David Stringer, Kyle Kreshover, Austin Johnson and Shaq R. Taylor, Clifford Chance
or technical expertise to pursue these opportunities. These strategic partnerships are essential in sectors like infrastructure, real estate and platform-building, where project execution is complex, where proprietary IP and expensive, specialised assets are prevalent, and where capital requirements are significant. JVs allow each partner to contribute different strengths, such as operational expertise, market knowledge, or specialised skills or assets. For instance, in July 2025, Energy Capital Partners, KKR and CyrusOne formed a JV to build out a 190 MW data centre campus in Bosque County, Texas, the first of a USD50 billion strategic partnership between ECP and KKR to sup - port AI infrastructure in the United States. Co-investments Co-investments are when a limited partner invests directly or indirectly into a specific deal alongside a lead sponsor, typically at a reduced or no manage - ment fee and without being burdened by the spon - sor’s carried interest. The sponsor generally retains control over governance and operations, while the limited partner gains direct exposure to the asset. Co-investments allow limited partners to selectively increase exposure to deals they find attractive without committing additional capital to the entire fund man - aged by the lead sponsor. For sponsors, bringing in co-investors enables them to pursue larger or more expensive deals without over-concentrating their fund’s capital, while also providing the opportunity to deepen strategic relationships with investors and pitch the limited partner on future opportunities. Over the past decade, these have become a significant - ly more prevalent form of fundraising. According to PitchBook data, in 2010, co-investment funds raised USD4.3 billion across all sectors, as compared to a record USD33.2 billion in 2024 across only 40 vehi - cles. Direct lending Direct lending provides an alternative to conventional debt financing in which a non-bank lender (such as a debt fund) provides debt capital directly to sponsors or portfolio companies, allowing sponsors to bypass the traditional syndicated bank loan process, and offering flexibility, speed and greater certainty com - pared to traditional syndicated loans. These factors are critical for larger or more complex transactions in
capital-intensive sectors such as energy and digital infrastructure, where timing and execution are critical. Showing the strength of direct lending, in July 2025, Legal & General, a British investment firm, partnered with Blackstone to deploy up to USD20 billion via pri - vate credit markets. Hybrid equity Hybrid instruments – like preferred equity, convertible debt and other combination instruments – sit between pure debt and equity. For sponsors, hybrid equity offers a mechanism to fill a financing gap without dilut - ing control as much as common equity would, while still providing investors with a return profile that may participate in the upside but also carries downside protections that are not offered in a true “equity” situ - ation. For companies receiving these investments, this can often be the most “expensive” form of solution for capital needs, as the sponsor receives the upside of equity and the downside protection of debt, so these solutions are often used by companies that may not have the required asset backing to make other solu - tions possible (early-stage infrastructure projects, for example). For instance, in 2025, Captona made a USD243 million preferred equity investment in esVolta in order to support development of 1GWh of BESS capacity in the ERCOT market. Core Negotiating and Transaction Considerations Complex capital structures require careful attention to many critical elements, regardless of the specific solu - tion being pursued: (i) governance rights; (ii) financial terms; (iii) exit considerations; (iv) information rights; and (v) regulatory and tax matters. Governance rights Allocation of governance rights and protections is critical for the adequate protection of an investment and a driver for its success. In large project structures, governance can range from (i) a sponsor-controlled board with broad authority over all decisions, to (ii) a strategic JV in which the management team runs day- to-day operations while the sponsor retains consent rights over fundamental milestones, project decisions or entry into critical contracts, to (iii) a club deal with true 50:50 control. Alternatively, a co-investment is often passive in control rights unless the co-investor’s investment is significant enough to justify a board
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