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The combination of increased regulatory pressure and additional investor demand for higher yield has seen numerous banks gradually displaced by private debt funds in the corporate lending sector (particularly for mid-market and SME borrowers). However, many banks, alongside an increasing pool of alternative lenders (collectively, "ABL Providers"), are comfortable lending to these private credit funds through so-called “credit portfolio finance” or “ABL facilities.”
Whilst there is nothing new about lending to private credit managers, the continued growth of the direct lending market has been accompanied by the increased use of back leverage at fund level through these facilities.
In this article, we look at some of the key issues for ABL Providers under these transactions in the European market.
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The market for financing pools of interests in private equity funds and private credit funds continues to sizzle, with new lenders joining the market and competition on pricing leading to a tightening of spreads for the most sought after deals. We are regularly having conversations with business principals, risk officers and internal lawyers at new and existing lenders looking to better understand this market. How to underwrite secondaries is a particular focus for new lenders, and is a topic we covered at yesterday’s Fund Finance Association University 2.0.
The 2024 Cadwalader Finance Forum is just days away and we are looking forward to seeing everyone in Charlotte.
Congratulations to Fund Finance partners Leah Edelboim, Brian Foster and Wes Misson, who have been named to the “2025 Lawdragon 500 Leading Dealmakers in America,” published today.
Join Fund Finance Partners for cocktails and networking with investors, fund managers, bankers, and lawyers within the fund finance market.
The purpose of this article is to unpack the basic building blocks of what constitutes a NAV Loan to make sure that market participants have a basic understanding of what is in a NAV Loan and their key negotiated issues. As noted in prior articles, and as discussed in various panels at Fund Finance industry events, what constitutes a NAV financing transaction often means different things to different people. A fairly broad description that we have used previously is that a NAV financing transaction is primarily a loan to a private equity ("PE") fund where the value of the investment assets of the PE fund provide support for the borrower’s loan obligations. While even this broad description doesn’t capture everything that bankers and lawyers in the industry think of when they hear NAV Loan, it’s sufficiently broad for purposes of this article.
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The countdown to the 2024 Cadwalader Finance Forum is on and we are excited to welcome David Golub, President of Golub Capital, as our keynote speaker!
Join Women in Fund Finance for the second event in Los Angeles! They are thrilled to welcome Polina and Filipp Chebotareva, Managing Partners from Cambridge Company SPG, as guest speakers.
Cadwalader's Wesley Misson and Brian Foster will be presenting at the FFA University 2.0, along with other industry leaders in New York on October 17, 2024.
