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A common feature included in credit agreements is a limitation on the amount of the unfunded capital commitment of a single investor (or the aggregate unfunded capital commitments of a class of investors) that can be included in the calculation of the borrowing base on any date of determination. Such feature serves to protect a lender against too great of an exposure to a single investor (or class of investors) and better ensures that the borrowing base is comprised of a diversified pool of unfunded capital commitments. In the early stages of fundraising, the investor pool may be limited in number and largely comprised of a short list of anchor investors. The application of a concentration limit can significantly diminish the calculation of the borrowing base under these circumstances.
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We continue to see significant interest in NAV financing products in both the U.S. and European markets, which is reflected in double digit year-over-year growth in our deal activity for these facilities to date. As compared to years past, there has been a noticeable uptick in new lenders willing to provide NAV financing (including both banks and private lenders). In mid-2020, at the outset of the pandemic, the spike in interest in NAV lending from sponsors was anecdotally explained by (i) sponsors being hesitant to call capital from LPs during the uncertainty of the pandemic and (ii) the inability of private equity-backed companies to obtain affordable financing during the disruptions caused by COVID shutdowns. Nonetheless, as these pandemic effects continue to fade and we shift to a very different macroeconomic environment, the demand for NAV lending remains strong. Here is a high-level summary of some of the key features of NAV loans, many of which are the focus of our conversations with clients.
On Wednesday, 300+ attendees participated in FFA University 1.0, and I was fortunate to get to provide the Closing Remarks to the highly engaged group. Below is a rough summary of the remarks I provided, which focused on my longer term predictions for our market, along with some career development tactics aimed at young professionals in Fund Finance in light of the uncertainties in the current macroeconomic landscape.
As financial conditions tighten, the private market is receiving its fair share of media coverage.
Following this week’s successful virtual FFA University 1.0, the more advanced 2.0 program for those seeking greater depth and networking opportunities will take place in person on Thursday, October 6 at Cadwalader's New York office, with a reception to follow. To join the waitlist, please click here.
Cadwalader's annual Finance Forum returns as an in-person event at the JW Marriott in Charlotte on Thursday, October 27. Programming will begin at 1:00 p.m. and continue throughout the afternoon, followed by a networking reception. Click here for a list of current panel topics and to register.
Women in Fund Finance is pleased to bring you the first installment of its “Charlotte Conversations” series on Tuesday, October 25 from 5:30-8:30 p.m. This inaugural event will function as both a networking event for the broader Charlotte-based fund finance community and a panel discussion on banking and finance careers in Charlotte. For further detail and to register, please click here.
It is generally the law that mistakenly-received funds must be returned to the sender. Last summer, we covered in detail the now-familiar Revlon case in which that understanding was tested and, surprisingly, not followed. On Thursday of last week, the United States Court of Appeals for the Second Circuit delivered a much-anticipated reversal of a lower court ruling – issuing a decision that feels like a return to the law as well as common sense.
In this episode of FFF: Industry Conversations, Brickfield Recruitment founder Rory Smith joins Wes Misson to discuss Brickfield’s upcoming report benchmarking U.S. and UK fund finance banking compensation and hiring.
Cadwalader's annual Finance Forum returns as an in-person event at the JW Marriott in Charlotte on Thursday, October 27. Programming will begin at 1:00 p.m. and continue throughout the afternoon, followed by a networking reception. Click here for a list of current panel topics and to register.
This week, the Cadwalader and Wells Fargo fund finance teams celebrated the end of summer as well as our long-standing partnership. The teams gathered in New York and enjoyed a luau theme and toasted to “capital call” cocktails.