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It has been a chaotic 72 hours, with changing facts, breaking news and unexpected developments. The market turmoil has kept us scrambling to figure out how best to get deals closed, to keep money moving and to meet our clients’ urgent needs. Below is a discussion of a few of the key things we have learned over the past few days, and our thoughts as to how they are relevant to the functioning of the U.S. Fund Finance market. We continue to be available to answer questions and to do whatever else is needed to help our clients navigate these challenging events.
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At this challenging moment, this older version of me has a few words of wisdom for my younger self and for all of you out there who are too young to remember Lehman (let alone the original airing of The Sopranos) and all that followed. So for what it is worth, what follows are notes to my younger self and the rest of you who are interested.
With the ongoing banking/financial markets disruption, we are staying very close to our clients to determine immediate actions and to assess the longer-term impact on the fund finance industry.
Please be sure to visit our Financial Markets Resource Center to access our firm’s across-practices insights regarding market developments.
While we will continue to be very proactive in responding to any new developments in the days, weeks and months to come, we encourage you to reach out to us with any questions or concerns. Together, we will get through this challenging cycle.
An article by 17Capital executives Robert de Corainville and Greg Hardiman focuses on the dynamics of the NAV finance market in 2022 and predicts explosive growth in the years to come. The article dives into NAV finance data from 2022 and provides a comprehensive analysis behind NAV financing’s strength amid turbulent markets. To view the article, click here.
The Fund Finance Association has officially opened registration for the 7th Annual European Fund Finance Symposium, which will be held on Monday, June 19, from 9 a.m. to 7:15 p.m., at the QEII Conference Centre in London. For more information or to register, please click here.
We look forward to seeing you there!
The Drawdown will host a members-only breakfast briefing, titled "Fund finance: Dealing with an increasingly complex lender landscape," on April 27 in London.
The program will feature a wide range of expert practitioners from across the fund finance community, including lenders and lawyers. The discussion will focus on the criticality of sourcing liquidity for operational leaders in private capital funds, and will also examine the rapidly shifting landscape when it comes to who is providing capital, as well as the increased complexity of the fund finance market.
Register your interest to attend here.
We know this has been a challenging time for many of our clients and friends in the fund finance industry, both professionally and personally. We join the broader fund finance community in offering our support in every way we can.
Stepping back and looking to provide industry guidance more broadly, we have created a “Financial Markets Resource Center” to serve as a central point of access for our firm’s insights regarding market developments.
The resource center features our best thinking on fund finance and the banking industry more broadly – in the form of Clients & Friends Memos and special issues of Cabinet News and Views, Fund Finance Friday and REF News and Views. We are also populating the resource center with additional informational resources and will continue to add timely content as it is produced.
And, of course, our best resource of all is our transatlantic fund finance team. Our lawyers have been working around the clock and around the globe to monitor developments, advise our clients on active transactions, and help them and the fund finance community keep pace with the broader implications of the ever-changing developments.
We’re here to help.
The FFA Board has issued a “statement of support” on the recent events in the banking industry and fund finance community. You can read it here.
The past six months have been turbulent in the fund finance world. We have seen lenders in the market deal with significant capital constraints, we have seen a small amount of lenders scale back in the fund finance lending market, deciding to deploy capital elsewhere, and we have also seen a large number of new lenders enter into the fund finance market to take advantage of rising interest rates and quality sponsors in need of liquidity. This past week, the focus shifted to the collapse of Silicon Valley Bank and Signature Bank and specifically what exactly will happen to the fund finance loans held by those lenders. In light of the above background, we thought it would be helpful to highlight some of the techniques commonly used by market participants when transferring an existing loan, and some key considerations when doing so.
In recent months, as lenders in the fund finance market have been more selective and demand for financing from fund borrowers remains high, we have seen a number of instances of lenders considering the use of and actually incorporating “market flex” provisions into their deal documents.
Women in Fund Finance hosted a panel discussion yesterday that featured a panel of senior women in infrastructure who discussed everything from their career paths to issues facing the infrastructure industry, such as the fundraising outlook, fund allocations, the impact of inflation and valuations, and the use of debt in these structures. Not surprisingly, ESG played a prominent role in the discussion.