The “denominator effect” tops the list of LP considerations in the current environment, according to an April 8 ILPA publication. The term is shorthand for the shifting portfolio allocation toward private equity that happens when the value of public equity holdings decline. IPLA summarized its anecdotal investor survey findings in a report titled “ILPA Insights: LP Perspectives on the Impact of COVID-19.”
Alex Bolton recently joined First Republic as a Managing Director, focusing on private equity finance. First Republic’s private equity finance offering includes capital call facilities, management company lending, GP finance, and a range of other banking solutions for private equity funds and their principals.
Our associate Danyeale Chung this week led a give-back effort from our team to healthcare workers in both New York and Charlotte where family members of our teammates are working on the front lines helping virus patients. The personal sacrifice these medical professionals are making is astounding. As a reward for meeting our fundraising target, Mike Mascia agreed to post this ridiculousness in this week’s FFF.
Here's a look at what we're reading outside the four corners of fund finance.
The Fund Finance Association this week hosted a call with representatives of its major event sponsors. Following the call, the FFA released a statement summarizing what its constituents are seeing in the market, addressing many of the narratives in recent press reports and providing suggestions for best practices for managing the challenges in the market.
Cadwalader’s Mike Mascia connects with Matt Posthuma, a Partner in Ropes & Gray’s fund formation group, in this week’s podcast edition of Fund Finance Friday: Industry Conversations. In the podcast, Matt gives an update on how the disruption is impacting fundraising in the real estate space, the state of real estate fund operations and capital call activity from his vantage point, and Investor performance on capital calls.
As part of the routine “know-your-customer” onboarding process, lenders are required to obtain the employer identification number (“EIN”) and other tax and beneficial ownership information from borrowers and guarantors to their credit facilities. Yet borrowers and guarantors formed in foreign jurisdictions, such as the Cayman Islands and Luxembourg, have recently had difficulty obtaining an EIN because the Internal Revenue Service has shuttered many of its offices in response to the COVID-19 outbreak.
The Private Funds Law, 2020 of the Cayman Islands (the Law) came into effect on 7 February 2020 and heralded a new regime for the registration of certain closed-ended funds with the Cayman Islands Monetary Authority (CIMA). The advent of the Law has led to discussion on whether to include an express covenant and event of default (or any other related provisions, such as conditions precedent and subsequent) relating to the Law into credit agreements.
The International Comparative Legal Guide to: Lending and Secured Finance 2020 was published this week by Global Legal Group (the same publisher that produces the Pink Book) in conjunction with the LSTA. Mike Mascia and Wes Misson submitted the chapter on Fund Finance.
PEI this week hosted a podcast with editors from its various publications in the buyout, private debt, real assets and secondaries spaces. They discuss the article they published on LP defaults, as well as the fund finance market, including NAV-based facilities and the impact on credit availability resulting from the drop in asset values, availability of assistance for private equity portfolio companies under the CARES Act, the level of communication between GPs and LPs, the impact of loan level defaults on the CLO market, the forecasted increase in tenant lease defaults, and more.