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Due diligence is a key aspect of the legal structuring and execution of fund finance facilities. In the subscription line market, there are generally well established conventions for performing due diligence on, in particular, the capital call mechanisms.
By contrast, in this article, we look at due diligence considerations in NAV financing; while this segment of the market is less settled in its approach, there are emerging trends in terms of approach to due diligence. Here, we consider these issues primarily from the perspective of the European market, though many of the issues will apply generally.
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The credit parties under a subscription credit facility may require flexibility in providing funds to their portfolio companies. Instead of using their own capital to make an equity investment in one of their portfolio companies or making an interfund loan, the credit parties may request that lenders under the subscription credit facility provide loans directly to their portfolio companies. Most lenders will accommodate this request by permitting portfolio companies to borrow under the credit agreement as “qualified borrowers” while other lenders will provide the requested funds through a separate portfolio company loan agreement.
This article will provide an overview of qualified borrower mechanics in a traditional subscription credit facility versus establishing a separate portfolio company loan agreement.
In the latest installment of our U.S. Bank Quarterly Survey, we review the current banking landscape and its historical context with two questions in mind: First, what do bank fundamentals tell us about the state of the U.S. economy (recognizing that this is a retrospective or coincident analysis)? And, second, what can we infer about the capacity and willingness of banks to extend credit (a more forward-looking inquiry)?
Cadwalader partner Nick Shiren authored a chapter in the newly released second edition of Brickfield’s “The Working Guide to Fund Finance,” a comprehensive guidance targeting lenders, lawyers, fund professionals and brokers practicing in the UK, European and offshore fund finance markets.
The new episode of the Praxio Fund Finance Expert Talk hosted by Michael Mbayi, with Kristina Kulikova, Senior Vice President at Setter Capital, and host of the Women of Secondaries podcast is available!
Fund Finance Friday readers, as the Thanksgiving holiday approaches, we want to take a moment to express our gratitude for your continuous support throughout the year.
In celebration of the festivities and to recharge, we'll be taking a short break and will be back with the next issue on December 5th.
In the context of NAV facilities, one item that we often see heavily negotiated is the lender’s right to challenge the borrower’s valuations of its investment portfolio. In this article, we will explore a few key aspects of the lender’s valuation challenge rights and how we typically see these points negotiated between lenders and borrowers in credit facility documentation.
Cadwalader partners Matt Worth and George Pelling, together with associates Martin Vojtko and Mira Midelieva offer a comprehensive look at the UK fund finance market in Lexology Panoramic: Fund Finance 2026.
Over 800 financial industry leaders and professionals from around the country participated in Cadwalader’s ninth annual Finance Forum in Charlotte on October 29.