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We have read reports that loose provisions in loan documents outside of the fund finance space have led to a recent uptick in disputes among parties, so lenders and borrowers in our sector should pay heed. While the fund finance market continues to prove resilient amid the turmoil of the global pandemic, now is as good a time as ever to stress-test key terms in existing subscription credit facility documentation to ensure they remain durable through economic dislocation.
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With the July 4th holiday in the States and many organizations taking Friday off, this week’s FFF is FFT.
Everyone anticipated a correction in the marketplace, but it’s fair to say that no one expected it to come in the form of a global pandemic. But here we are. For GPs – especially emerging managers – using a capital call line is a very effective tool to manage capital calls. Let’s explore how capital call lines (also known as subscription lines) can help and what to expect from a bank vis-à-vis capital call lines and a banking relationship in general.
Private Funds CFO (“PFCFO”) recently published a series on the changing landscape of subscription credit facilities as a result of the pandemic.
Alexa Schult has been promoted to Director from Senior Credit Analyst at First Republic Bank. Alexa has six years of experience working with alternative investment firms. She started her banking career by supporting the daily cash management needs of companies across various industry types.
This week, I decided to reflect on a few topics that have repeatedly come to mind during the turbulence of the last few months.
In today’s video version of Fund Finance Friday: Industry Conversations, Pratap Dasgupta of Macquarie provides an update on the secondaries and greater NAV financing markets, Rich Young of Cadwalader discusses his next career chapter, Michelle Bolingbroke announces her more formal role with the Fund Finance Association, and Ken Bigelow, Managing Partner at Sionic, introduces his firm’s software solution for banks that is specifically customized and designed for subscription finance. Cadwalader’s Mike Mascia hosts.
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Bloomberg this week covered the NAV financing market, including the effect of the coronavirus driving elevated demand for loans to private equity funds in need of liquidity for portfolio companies at interest rates as high as 15%.
This ain’t quidditch, but the Financial Times featured an extensive discussion of subscription lines this past week. Sponsors will be surprised to learn that their sophisticated and demanding institutional investors are “spellbound” and “bewitched by claims of superior performance.” In addition, the professionals who read this blog will be flattered to know that their “wizardry,” according to the article’s headline, “breathes magic into private equity returns.” Fund Finance Friday thinks the truth is likely more mundane and workaday.
In a Private Funds CFO article, Shelley Morrison, senior investment director of Aberdeen Standard Investments’ fund finance group, discusses the growing trend among smaller banks and major European fund finance banks to build out their syndication teams for the subscription credit facility market.
Last Friday marked the launch of Wildgen’s new “Fund Finance” webinar series hosted by Wildgen’s own Michael Mbayi (Director). The series’ inaugural episode, titled “A Decade of Fund Finance,” features a panel of industry leaders: George Cherry (Managing Director, Citi Private Bank), Michael Mascia (Partner, Finance Co-Chair, Cadwalader), Paul Tannenbaum (Partner, Mayer Brown), and Olivier Vermeulen (Managing Partner Paris, Head of Finance, Paul Hastings). With the first episode aimed at examining Fund Finance over the last decade, the panel’s discussion provides both a cursory overview of the Fund Finance Industry and in-depth analysis of its recent evolution.