An increasingly common trend in subscription/capital call financing, reflecting the increasing appetite of funds in this area, is the utilisation of what is a fairly typical leverage or borrowing base in a subscription/capital call line to facilitate the provision of hedging (either for interest rates or for fx) on top of the standard subscription/capital call line.
American Banker earlier this week published an article titled, “Banks extending more credit to PE. Will they regret it?” The article covers the growth of fund finance as well as discussions of subscription finance on recent bank analysts calls.
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David Arthurson has joined Standard Chartered Bank as Executive Director in its Financial Strategic & Investors Group. |
The FFA earlier this week requested nominations for several awards that will be presented at the FFA's Global Fund Finance Symposium in Miami on February 12-14, 2020.
Here are updates to our Fund Finance Calendar.
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This week we connect with Alex Bolton for a sweeping discussion that covers competing in a crowded lending market and the outlook for fund-level asset-backed lending, as well as his observations on deal pricing. Alex is a senior banker in the New York fund finance team of National Australia Bank. |
A regime for a mix of events which require mandatory prepayment and options for borrowers to make voluntary prepayments, as well as mandatory or voluntary cancellations, are a common feature of all LMA-based loan documents, and a subscription/capital call facility is no exception.
An IASB accounting standard set to take effect in 2021 may lead non-U.S. insurance companies to increase allocations to private funds to diversify existing holdings and to enhance returns.
In the United States, while there are certainly exceptions, it has become a common market custom for the debt limitations in a subscription facility to simply incorporate the debt limitation(s) in the fund’s partnership agreement (the “LPA”). We reviewed a facility recently where that construct had the potential for a syndicate member to get sideways with the terms of their initial credit approval, so we wanted to highlight the issue.
Fitch Ratings recently published a primer on the securitization of private equity fund interests or "LP interests" (typically called "collateralized fund obligations" or "CFOs").