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Private equity co-investments look set to rise as buyout firms need them just as much as investors, despite the appearance that firms are doing their clients a favour.

Raising new funds is difficult and if raised, fund sizes are likely to be smaller, said Bob Long, president of Conversus Asset Management LLC (CCAP). So, to continue doing the same size deals that firms worked on in the past, general partners are inclined to stretch their existing funds by offering co-invests to their limited partners.

Euronext Amsterdam-listed Conversus has made five co-investments worth a total $75 million.

Co-investments give a good glimpse into the changing dynamics in the private equity industry after the financial crisis. Many buyout firms have heaved a sigh of relief as a large portion of their portfolio companies are still left standing following the Great Recession. But their ability to swing big deals seems to have lost some clout.

Financially, many buyout firms are getting less capital from investors and less financing on deals from banks. So making the most of whatever sum they have to invest is of utmost importance to them.

There has also been a shift in the general partner-limited partner relationship, where cash-rich institutional investors are becoming mightier than ever.

Limited partners, that is the institutional investors in private equity funds, are demanding the right to co-invest in deals, a person with a multi-billion buyout firm said.

In a poll of investors by data provider Preqin, 54% said they look to make direct private equity investments, 78% of which hope to gain exposure through co-investments alongside fund managers in their portfolios.

It allows you to both have more enduring relationships. but also to create new products that are a source of growth for the firm and in some instances particularly in co-investments, which actually increase your assets under management and increase your ability to earn more money, Blackstone Group LP BX, -1.91% Chairman and Chief Executive Stephen Schwarzman said in its second quarter earnings call last week.

Granting co-investment rights is often seen as a trade off for future capital flow.

Co-investment opportunities are a way for the general partners to incentivize their limited partners to participate in the next fundraising, said Monte Brem, chief executive of $20 billion private equity asset management and advisory firm StepStone Group LLC.

Data provider Preqin said funds are still out in the market seeking $680 billion, after having raised $128 billion in the first half.

As many funds are either in the midst of fundraising or about to launch new funds, we can expect more co-investments to occur, Brem said.

It is difficult to gauge exactly how many private equity deals have institutional investors as co-investors, because many co-investors got involved in deals late in the process, and in any case deals are only recorded by data-tracking firms as backed by financial sponsors.

There were only three announced co-investments, worth a total $11.9 billion, since 2010, Preqin said. In all three deals, Canadian pension funds took part from the very beginning—conducting their own due diligence and joining in the price-negotiation process.

If it is any indication of how prevalent co-investments are, $1 billion of Blackstone’s $9 billion purchase of Centro Properties Group’s U.S. assets was footed by co-investors.