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New to fund finance or know someone who is? Here’s a guide to primers we’ve previously published in Fund Finance Friday.
Even though the market practice has shifted away from obtaining investor letters (“Investor Letters”) for many subscription-based credit facilities (“Facility”), Investor Letters continue to be an effective option to provide additional credit support for certain types of Facilities with single managed accounts and challenging lender provisions in side letters. One of the reasons for this change is that Limited Partnership Agreements (“Partnership Agreements”) have become much more lender-friendly, provide more robust secured Facility provisions, and include many of the important Investor Letter provisions. Investor Letters have historically supplemented the standard loan and security documents and fund formation documents to provide direct assurances from a limited partner (“Fund Investor”) to a lender that the Fund Investor unconditionally stands by its capital commitment to a fund (“Fund”). In this article, we will explore a few of the key provisions contained in Investor Letters and the significance of each to a lender in a subscription facility.
When thinking, talking and writing about subscription credit facilities, the fund in question usually has a diversified group of investors with a wide range of commitment sizes – those funds are commonly referred to as “commingled” funds. On the other end of the spectrum are funds consisting of just one investor (or just a handful of investors) – those funds are commonly referred to as “SMAs” (Separately Managed Accounts). Why do SMAs exist and why would a lender lend to a “fund of one”?
The COVID-19 pandemic brought with it a newfound concern for the financial strength of state pension plans, particularly in states that were already experiencing credit deterioration, growing debt concerns or underfunding issues. Having weathered what will hopefully be the worst of the crisis, our market has emerged unscathed in terms of no known material defaults by governmental investors, including state pensions. In fact, many state pensions have re-upped commitments with funds, and we saw the end of 2020 cap off the most robust year ever for SMA facilities with state pensions as the sole investor. But what if you had to sue to collect from a state pension investor?
The Fund Finance Association organized an exciting lineup of content for the 10th Annual Global Fund Finance Symposium at Miami's Fontainebleau Hotel from February 12-14. Here are our key takeaways from this fantastic event.
We can pack in some serious substance on a Friday (not necessarily everyone’s peak time for absorbing a nuanced discussion on complex financial products). Here’s a recap of original substantive pieces from recent issues for easy reference.
We can pack in some serious substance on a Friday (not necessarily everyone’s peak time for absorbing a nuanced discussion on complex financial products). Here’s a recap of original substantive pieces from recent issues for easy reference.
Given the popularity of side letters in fund finance transactions today, we thought it would be useful to highlight frequent issues that arise and that are important for lenders to look out for.
We can pack in some serious substance on a Friday (not necessarily everyone’s peak time for absorbing a nuanced discussion on complex financial products). Here’s a recap of original substantive pieces from recent issues for easy reference.
We can pack in some serious substance on a Friday (not necessarily everyone’s peak time for absorbing a nuanced discussion on complex financial products). Here’s a recap of original substantive pieces from recent issues for easy reference.