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This article looks at the distinguishing features of infrastructure funds from a credit perspective, their typical funding requirements, and the potential lessons for NAV facilities to private equity funds. While there remains some debate on the precise limits on infrastructure as an asset class, for the purpose of this article we will use infrastructure funds to refer to any fund established for the purpose of investing in a portfolio of assets comprising investments in PPP, energy (including renewables) and/or infrastructure projects that are characterised by their long-term revenues.
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As we near the close of the second quarter, eagerly look forward to next week’s 6th Annual FFA European Fund Finance Symposium in London and keep a watchful eye on the macroeconomic environment, we thought it would be helpful to provide an update on 2022 market activity based on our observations.
The LIBOR transition process continues to roll along. New transactions are (mostly) being closed without using LIBOR any more, and many legacy transactions are naturally transitioning when refinanced or renewed this year. However, a significant portion of the legacy loan market remains that will require active transition at or before LIBOR cessation on June 30, 2023. In order to help members think through the process, the LSTA has produced and distributed a series of amendment forms that may be used by market participants as part of the LIBOR transition.
This week, Women in Fund Finance hosted a panel discussion, "Infrastructure Fund Life Cycle Considerations: A Bank and Funds’ Perspective." The esteemed panel included Adina Schwartz from Morgan Stanley, Micaela Mastrogiannis from KKR, Vicky Du from Standard Chartered, and Sarah Elliot from NAB. The panel was moderated by Carolyn Baker from Commonwealth Bank of Australia. This robust discussion focused on the unique challenges of using fund level credit facilities, including subscription, NAV, or hybrid, and providing liquidity management solutions throughout the lifecycle of an infrastructure fund.
Cadwalader’s financial services team hosted the first part of a four-part webinar series on capital relief trades and opened registration for the second installment.
Moody’s Investors Service this week published a brief overview on capital call lending. Rather than ratings metrics, the write-up focuses on the role of capital call lending in the banking sector. Available behind a paywall here.
Do you know a Rising Star with an outstanding overall contribution to the Fund Finance industry? Nominate them here to be recognized at the 2022 annual "Rising Stars" award ceremony. The Fund Finance Association, in collaboration with NextGen, is eager to celebrate individuals with less than 10 years of fund finance experience who emphasize our industry’s career pillars, such as professional contributions focused on excellence in client service, diversity and inclusion, training and mentoring, networking and community service. Nominees can be nominated by anyone, any number of times, by July 29. Click here to nominate someone.
The Wall Street Journal this week published an article focused on how investors are addressing over-allocations to private equity using fund finance solutions like preferred equity and collateralized fund obligations as an alternative to reducing new commitments and sales in the secondary market. The subscription-required article is accessible here.
Scott Aleali and Jeff Maier hosted former Wake Forest and Charlotte Hornets star Muggsy Bogues this week on Fund Fanatics for a wide-ranging conversation, including his NBA career, overcoming adversity, leadership and culture, and his philanthropic activities. Watch the episode here.
Minority lender roles in transactions come up frequently and generally don’t warrant specific comment where there is a diverse lender base or established lender relationships, but sometimes the facility holdings are such that one or a small group of lenders can constitute the majority for the purposes of consents and amendments. The amount of focus relative hold amounts and voting power receive from the lender or lenders with the minority position will vary depending on a number of factors, including the type of deal, size of hold, whether the majority lender is a bank or fund lender, the relationship with and reputation of the sponsor, the relationship with the majority lender(s), the identity of the agent and the complexity of the transaction.
This article updates on sanctions as they relate to the Cayman Islands and some of the questions that Cayman funds are facing in practice.