In private equity, what does the term 'syndication' refer to?

In private equity, 'syndication' refers to the collaboration of multiple firms coming together to share the risks and returns associated with an investment. This practice allows different investors or firms to pool their capital, which can provide the ability to take on larger investments that may be beyond the capacity or risk tolerance of any single firm. By syndicating, firms not only diversify their investment portfolios but also foster collaboration among experienced partners who bring different insights and expertise to the deal. This can enhance the management of the investment and improve the likelihood of achieving favorable returns.

The other terms mentioned relate to different concepts in private equity. The creation of new funds pertains to fundraising activities and structuring investments, which is distinct from the collaborative investment approach in syndication. Individual investment strategies focus on specific tactics or methodologies a firm might use for investing, separate from the shared investment concept. Lastly, distributing returns among limited partners is about the financial workings post-investment and does not describe the initial collaborative investment process of syndication.