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Over the last 18 months, we’ve seen a sharp uptick in inquiries from U.S. banks about how to use capital relief trades to manage regulatory capital constraints. Here, we set out our responses to some of the frequently asked questions we’ve received on this topic. Look for a registration link in next week’s FFF for our upcoming webinar series on these transactions.
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This article continues our prior discussion of the risk of “bad acts” by a borrower in certain NAV loan structures. For our purposes, NAV loans are loans to alternative investment entities (e.g., private equity funds, secondaries funds, hedge funds, funds of hedge funds, pension funds and family office vehicles) that are underwritten, either on a secured or unsecured basis, by the value of the entity’s investments. Even in secured NAV loan facilities, rather than a direct pledge of the underwritten assets for the financing (i.e., the fund’s portfolio of investments), lenders typically will only receive a pledge of the management and economic interests in one or more controlled subsidiary holding vehicles (“HoldCo”) that hold the investments (i.e., an “indirect pledge” of the investments). As a result, the borrowers typically maintain complete control over the assets that the lenders are underwriting.
The fundraising outlook has become more complicated in recent months. No question, year-to-date data looks good. PitchBook, for example, reports that 191 U.S. PE funds raised $176 billion in the first half, annualizing ahead of last year’s full-year fund value raised of approximately $340 billion. More broadly, global private capital raised in the first half totaled $645 billion, according to Preqin data, which, while lower than in 2021, sets the industry up for another trillion-dollar-plus year. Those numbers, however, are in the rearview mirror at this point, and a host of factors are clouding the forward outlook.
Private Funds CFO interviewed industry leaders Anastasia Kaup of Fund Finance Partners, Vicky Du of Standard Chartered, and Katie Cotterell of Bridgepoint Credit on the rise of ESG-linked fund financing. You can access the article here.
Women in Fund Finance will be hosting a fireside chat with Gretchen Carlson and Julie Roginsky, the founders of the "Lift Our Voices" organization. The event will take place in New York City on September 13 and will specifically focus on discrimination and harassment in the workplace. Gretchen and Julie will also discuss the work they are doing to ban NDAs and forced arbitration clauses around the country. To register and learn more about the upcoming event, please click here.
Walkers and MUFG Investor Services have issued a joint report on ESG trends in the European fund finance market. Spurred by legislation and investor demand, ESG considerations are focusing asset managers’ investment decisions towards sustainable finance in the EU. This type of investing aligns the borrower and lender towards the common goal of achieving measurable positive objectives. Though accompanied by increased disclosure requirements, ESG fund finance has created opportunities for lenders to offer exciting new products. To learn more about ESG fund finance in the EU, please click here.
Be sure to save the date − Tuesday, October 25 − for Women in Fund Finance's inaugural panel and networking event in Charlotte, North Carolina. Additional details regarding topics, panel details and agenda will follow.
Cadwalader’s financial services team concluded its four-part series on capital relief trades earlier this week.
Cadwalader is seeking senior-level attorneys with 7+ years of relevant experience for its Fund Finance practice in New York, Washington, DC, or Charlotte. Qualified candidates will have experience in syndicated lending, commercial lending, leverage finance, fund formation, CLOs, asset-based lending, NAV financings, or acquisition financings.
We are very pleased to welcome several attorneys to our Fund Finance group and our firm. We look forward to their contributions as part of our growing team, which now numbers 81 attorneys and paralegals globally dedicated to fund finance.
William Cowper once wrote that “variety is the very spice of life.” This could ring true in many circumstances, but is becoming particularly fitting for alternative asset managers, or AAM, when evaluating sources of liquidity across a variety of fund finance solutions. Since the dawn of finance, the differing requirements of debt providers has created a range of financing options across the private and public capital markets. For corporate borrowers, these markets are mature and well understood. However, for AAMs, the debt markets are relatively embryonic and ever evolving, with a range of capital providers. Here we explore the types of capital available to AAMs across the various fund finance products, and the growth of institutional capital in each.