Carry vehicles are a fundamental component of the private capital fund structure, designed to allocate carried interest to key stakeholders – including asset manager executives, managers, and employees – as part of a broader management incentive plan. 

In some structures, these vehicles also participate in co-investment activities, investing pari passu alongside limited partners. This dual function introduces a unique layer of complexity and sensitivity into their administration.

The hybrid nature of carry structures

What differentiates carry and co-investment vehicles from traditional fund or corporate structures is their hybrid nature. Although they are corporate entities and do not qualify as Alternative Investment Funds (AIFs), in practice, they function much like mini-funds. They involve investor allocations, capital activity notices, NAV valuations, and capital account statements – despite typically not holding portfolio assets directly.

Why administration often starts in-house

For these reasons the administration of carry and coinvest vehicles has been often kept in house by asset managers – driven by the need of having a more tailored approach in dealing with internal stakeholders. 

The same need is somehow also the origin of the increased complexity of these vehicles over time: different classes of stakeholders require different allocation rules, with staff changes triggering updates in the carry holders structure, vested interest and proceeds settlement.

This complexity is probably better managed by the asset manager at the beginning of the vehicle life cycle, when allocations are static, there is not yet any distributable carry and the number of the funds under management is limited.

When growth becomes a challenge

As the number of funds and internal headcount grows, managing these responsibilities can become increasingly challenging. This is often when we observe asset managers beginning to outsource specific functions, such as corporate accounting or carry allocation administration. In many cases, the internal HR team continues to handle onboarding and communication with carry holders.

The shift towards outsourced and co-sourced models

As vehicle count, capital activity, and investor volume continue to grow, many asset managers transition to a fully outsourced or co-sourced model. Administrators can leverage dedicated technologies – already used for fund entities – to automate key processes from investor onboarding to proceeds distribution.

A co-sourced model is sometimes preferred over full outsourcing, as the HR and finance teams may wish to retain certain functions or data access in-house, either for internal reporting purposes or to meet specific stakeholder preferences.

Data privacy and access control: A critical concern

In a co-sourced setting, data privacy and access control become especially critical, particularly when carry holders include C-suite executives. Assigning access rights on a strict need-to-know basis is essential.

A robust control framework – with regularly reviewed and maintained access rights – helps ensure secure and consistent data access for the designated group of users, supporting both operational efficiency and confidentiality.

How Centralis helps asset managers co-source with confidence

How does Centralis Help? We provide flexible co-sourcing solutions that allow asset managers to retain control over critical functions while leveraging our specialist expertise, infrastructure, and technology to manage operational complexity.

Here’s how we support co-sourced arrangements:

1. Tailored Process Design
   We work alongside the CFO to understand his internal reporting requirements and design workflows that align with your specific policies, stakeholder requirements, and reporting needs.
2. Technology Integration
   We work with the manager to understand their dataflows, counterparties and technology stack. We look to ensure seamless data sharing and visibility. Thereby ensuring that the asset managers can retain key data sets for internal analysis and stakeholder communication.
3. Modular Services
   Centralis can manage select functions – such as carry allocation tracking, proceeds distribution calculations, or compliance checks – while your team continues to handle investor communication, governance oversight, or reporting.
4. Scalability and Expertise
   As your fund structures and investor base grow, Centralis provides the scalability and depth of expertise to ensure continuity, accuracy, and control without requiring large internal headcount increases.
5. Regulatory Alignment and Governance
   We ensure co-sourced operations meet regulatory obligations and best practice standards, supporting your governance framework and compliance reviews.

Balancing control, complexity and confidentiality

The evolving demands of carry and co-investment vehicle administration present asset managers with a strategic challenge: how to manage increasingly complex structures while maintaining discretion and control.

For many, co-sourcing is the ideal middle ground – offering scalable, technology-enabled operations that reduce internal strain, while safeguarding sensitive data and allowing HR and finance teams to stay closely connected to the process.

With a partner like Centralis, asset managers gain the flexibility to adapt their operating model as they grow – without compromising on accuracy, compliance, or confidentiality.

Get in touch to find out how we can support your business.