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As with many other corporate or financial transactions between two or more parties, and especially given the relationship-nature of subscription finance lending, provisions in legal documentation often get replicated from one transaction to the next, including errors and inconsistencies as a result of the fast-paced world in which practitioners find themselves or, in some cases, a failure to connect the dots.
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Another wild week: we saw massive swings on the stock market, political drama over aid packages, and many settling into a work-from-home routine that includes challenges such as home schooling and the need for at least one-third of the world’s population to comply with government-mandated stay-at-home orders. All of this in the midst of the greatest public health crisis the world has seen since 1918. Just two weeks ago, many of us were going about our daily lives – traveling, going to shows and sporting events, eating and drinking at our favorite restaurants and bars, and routinely convening face-to-face with colleagues and clients. This seems like two decades ago.
Starting this week, FFF is going to include short podcasts with third-party industry leaders in an effort to get real-time information to our readership. The podcasts will be accessible from FFF, on fundfinancefriday.com and on Spotify. In our premiere "Fund Finance Friday: Industry Conversations" podcast, Cadwalader's Mike Mascia interviews Jocelyn Hirsch of Kirkland & Ellis on what she is seeing in the leveraged finance and fund finance markets along with what she is hearing from her fund sponsor clients.
Amid the global COVID-19 pandemic, opportunities continue to arise in the fund finance space for both banks and borrowers alike. The markets are showing some signs of calm this week, and all parties are looking for new opportunities to continue and grow business. Private equity firms, in particular, are looking more closely at distressed asset investments that are now available at discounted prices, and general partners are already identifying new business investments across the more suddenly successful technological, pharmaceutical and biotech markets.
The Fund Finance Association is postponing its European Symposium in response to the coronavirus pandemic. Originally scheduled for July 8, 2020, the conference is now scheduled to take place on October 22, 2020 at The Landmark in London. According to the FFA, the planning of the conference was well underway, with more than 600 registered participants and 11 confirmed sessions scheduled to take place over the course of the day.
The spread of COVID-19 and its impact on markets across the world present the largest test of private equity and fund finance in more than a decade, according to a report by Investec.
According to Private Equity Wire, this week Hamilton Lane entered into a $75 million credit facility with First Republic Bank for working capital and general corporate purposes.
A Law360 contributed article reports on some key considerations for maintaining availability of revolving credit facilities and the continued compliance by companies faced with the wide-ranging effects of COVID-19.
According to Buyouts, with the recent market downturn, funds are reportedly concerned about the risk that banks may suddenly call in the credit facilities.
In “Capital calls look set to increase as firms try to weather coronavirus crisis,” Private Equity News suggests that private equity managers are moving towards calling capital earlier and more frequently to pay down debt. The article also suggests that investors may prefer that the funds rely on credit lines to extend the time before a capital call is made.
Institutional Investor reports that LPs are gearing up to sell some of their private equity assets in preparation for the continuation of the coronavirus-triggered market rout.