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It’s already been two weeks since we wrapped up the Cadwalader Finance Forum in Charlotte, which featured a panel on “New Approaches in the NAV and Secondary Market.” The panelists provided attendees with an entertaining and very educational discussion explaining what exactly is NAV finance (see summary of panel discussion here). Given the packed crowd for the panel and the general buzz at the conference, it should be obvious to even the casual observer that interest in NAV finance is at an all-time high (which is saying something since it has consistently been one of the hot topics at industry conferences in recent years). So, as we enter the home stretch of 2023, we wanted to reflect this week on the state of the U.S. NAV finance market and provide some thoughts on trends we are observing and what we are hearing in the market as we get ready to wrap up what has been a dynamic year.
Articles
It’s not unusual for new products to come under scrutiny in their ‘growing up’ phase, but some concerns around NAV loans may be misplaced.
(This article originally appeared in Private Equity International. You can view the article here.)
On Thursday 30 November, Cadwalader’s Women’s Leadership Initiative (“WLI”) hosted the first Girls in Finance day in London.
The WLI welcomed 20 students from the Eden Girls’ School in collaboration with the East London Business Alliance to Cadwalader’s London offices, for an immersive morning learning about careers in finance and an array of finance concepts.
The FFA APAC team invites you to join them for an evening of networking! Please join for drinks, canapes, and an opportunity to socialize and celebrate the year with colleagues and associates in the fund finance industry.
The event will be hosted simultaneously in Hong Kong, Singapore, and Sydney on December 7, 2023.
Recallable capital is a hot topic these days in both subscription financing and NAV financing transactions, both at industry events and in the press. There has been a good deal of attention to this concept in the NAV market in particular over the past few weeks. I recently attended an event for women in the private equity secondaries market and while making small talk over some (excellent) wine I happened to mention that I am a fund finance lawyer. Immediately, a number of people wanted to talk about recallable NAV loans – there was some urgency to the conversation and a bit of indignance.
As I will explain below, there are certain features of the current economic environment which have increased the focus on the rights of a general partner to recall distributions and the provisions in a limited partnership agreement that give rise to these rights. Although there has been some excitement over these provisions, it is the current environment that has brought these provisions – which are contained in nearly every limited partnership agreement (“LPA”) – into focus, rather than anything particular to subscription or NAV financing arrangements generally.
Join Scott Aleali, Head of Private Equity Finance at Citizens Bank, and Jeff Maier, Senior Managing Director - Private Equity Finance at Citizens Bank, with special guest Mario Giannini, CEO of Hamilton Lane, for the comeback episode of Fund Fanatics!
On November 7th in New York City, Women in Fund Finance U.S. hosted a panel, together with Morgan Stanley and TriState Capital Bank, entitled “Who is Lending? Perspectives from Banks and Fund Sponsors in a Volatile Market”.
PNC Bank is looking to hire a Capital Markets Sr Associate within PNC’s Asset Backed Finance Organization. This position is primarily based in New York, New York. A description of the role, and additional details are available here.
Moody's Investors Service recently published its new proposed methodology for rating subscription credit facilities.
The proposal is available on the web at this link and the comment period will be open from now until December 4th.
As noted in Angie Batterson’s wonderful panel at our Finance Forum in Charlotte last month, the term NAV loan means different things to different people, and can encompass a diverse mix of structures and asset classes in the market. Borrowers under "NAV loans" can include private equity funds, secondaries funds, hedge funds, funds of funds, private credit funds, real estate funds or infrastructure funds, to name a few. Examples of asset classes we see underwritten in connection with NAV loans include equity and debt interests in private companies, private funds or exchange-listed companies, preferred shares, bonds, loans and real estate. Regardless of the type of NAV transaction and the type of assets being underwritten by the lender, one fundamental aspect of all NAV deals is the level of security provided to the lender in respect of the investment assets. This article highlights some of the key characteristics of secured loans and so-called “negative pledge” loans.
Moody's Investors Service recently published its new proposed methodology for rating subscription credit facilities.
The proposal is available on the web at this link and the comment period will be open until December 4.