Here are some updates to our Fund Finance Calendar.
Overcall limitations limit a non-defaulting investor’s obligation to make up for any shortfall in funding caused by other investors defaulting. In the absence of such a limitation, each “non-defaulting” investor would be liable for up to the whole balance of its commitment to make good any such shortfall. Overcall limitations have become increasingly commonplace in fund documentation as investors often want to limit their obligation to compensate for any shortfall in funding caused by a default by a fellow investor.
The Bank of International Settlements (BIS) this week published a notable report on LIBOR replacement. No one can be blamed at this stage for fatigue on the topic, but the BIS report is nonetheless worth a read.
Global Legal Group this week published the third edition of Fund Finance 2019, widely referred to in the market as the “Pink Book.” The treatise includes 21 product-oriented chapters submitted by the most prominent law firms in fund finance, covering virtually every aspect of the market. It also includes jurisdictional updates for 22 countries, a helpful resource for brushing up on a new jurisdiction or selecting local counsel. Mike Mascia of Cadwalader is again the contributing editor. The treatise can be downloaded here and hard copies will be available at the Fund Finance Association’s Global Symposium later in the month (use Code GLIFF2019).
Cadwalader is hosting a cocktail reception at the 9th Annual Global Fund Finance Symposium in Miami. The event is scheduled for 8:00 p.m. (following the FFA’s welcome reception) and will be located at Scarpetta within the Fontainebleau Hotel. Significant others may join. To register, click here.
Brookfield buys a majority stake in Oaktree.
James Rock-Perring has joined Intertrust to establish a new fund finance advisory business.
PERE published an article on March 7, titled “Warning bells sounded over GFC-style leverage use.” The article discusses Asia private real estate managers using strategies predicated on leverage levels reaching 90 percent loan to value. The article mentions the use of subscription lines, which it lumps in with real estate mezzanine debt. The full PERE article is available here.
Here are some updates to our Fund Finance Calendar.
MJ Hudson published a primer on subscription credit facilities titled “Line Dance: The Rise of Subscription Credit Lines in Private Funds.” The article summarizes many of the views expressed in the financial press in the last two years and gives a summary of the ILPA guidelines. For a primer, it is relatively current and does a nice job of summarizing the issues (well, maybe theoretical issues). While thoughtfully prepared, we thought it unfortunate that there is again a suggestion to investors that subscription facilities impair transferability of their LP interests. There is also a suggestion to regulators that the product creates systemic risks. We do not agree with those suggestions. A copy of the article is available here. A copy of Cadwalader’s response to an article making similar insinuations about investor transfers and systemic risk is available here.