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As with many other corporate or financial transactions between two or more parties, and especially given the relationship-nature of subscription finance lending, provisions in legal documentation often get replicated from one transaction to the next, including errors and inconsistencies as a result of the fast-paced world in which practitioners find themselves or, in some cases, a failure to connect the dots.
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With the end of March came the close to a quarter that many investors will be eager to forget. Down more than 23%, the Dow Jones Industrial Average suffered its worst first quarter in 124 years and its worst quarter overall since the 1987 “Black Monday” stock market crash. The S&P 500 didn’t fare much better, declining 20% during the first quarter, its worst decline since the 2008 financial crisis. The price of a barrel of oil dropped to $20, energy, airline, and hotel stocks plummeted, and bitcoin fell by 10%. Other than gold and toilet paper, there were few places to hide. This overall decline was punctuated by bouts of extreme volatility, with equity markets whipsawed up or down on a near-daily basis. All of which contributed to an interesting few weeks in equities finance. Below are some observations as to what we have seen and what we expect to see in the near-to-medium term.
With all the press reports on subscription facilities and investor liquidity, Cadwalader’s Mike Mascia sits down for this week’s "Fund Finance Friday: Industry Conversations" with Jennifer Choi, Managing Director of Industry Affairs at the Institutional Limited Partners Association (ILPA). In the podcast, Jennifer gives updates on how the investor community is weathering the disruption, the state of capital call activity, communication levels between GPs and LPs and investor sentiment on their liquidity positions. While some of the data is sobering, Jennifer's message for collective effort and cooperation across the market is uplifting and productive.
The Federal Reserve has moved quickly since mid-March to expand the use of conventional monetary policy along with adding a slate of temporary programs to support specific capital markets and intermediaries. For once, fiscal policy has moved in step, with the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act making a relatively expedited trip through the legislative process. How have private funds fared so far? Here are the key takeaways.
The LSTA this week hosted a webinar on Fund Finance. Cadwalader’s Mike Mascia joined Meyer Dworkin of Davis Polk, Joel Denny of Nomura and Tess Virmani of the LSTA to provide a high-level overview of subscription facility and NAV-based lending structures and terms.
Some fund managers are taking action to address liquidity concerns and find solutions in a market impacted by the COVID-19 pandemic. In a conversation with Private Debt Investor, Fund Finance Partners identifies key dynamics that have developed in the fund finance market as sponsors focus on liquidity.
Scott Aleali and Jeff Maier of First Republic Bank published an article earlier this week on LinkedIn discussing the impact of COVID-19 on subscription lines and the fund finance market.
Private Equity International and Private Funds CFO published and distributed multiple articles this week about limited partner liquidity and the private equity space in light of the COVID-19 crisis.
Annabella Kwei has joined Citibank, N.A. as Vice President/Specialist Lead on the Sponsor Finance team as part of the firm’s initiative to expand its growth in fund finance.
Here's a look at what we're reading outside the four corners of fund finance.
Atrium Health, the largest healthcare provider in the Carolinas, has created an initiative called “Make Noise to Make a Difference” to support all of the healthcare providers battling COVID-19.