According to Buyouts, with the recent market downturn, funds are reportedly concerned about the risk that banks may suddenly call in the credit facilities.
In “Capital calls look set to increase as firms try to weather coronavirus crisis,” Private Equity News suggests that private equity managers are moving towards calling capital earlier and more frequently to pay down debt. The article also suggests that investors may prefer that the funds rely on credit lines to extend the time before a capital call is made.
Institutional Investor reports that LPs are gearing up to sell some of their private equity assets in preparation for the continuation of the coronavirus-triggered market rout.
Michael Newell, a leading fund formation partner, recently joined our firm in London. Mike’s arrival strengthens our growing transatlantic funds group, which includes fund formation partners supported by and supporting our market-leading U.S. and UK fund finance, regulatory and tax teams.
Here's a look at what we're reading outside the four corners of fund finance.
Like every industry, Fund Finance evolved extensively this week, and for the first time since the disruption commenced, included a fair bit of misinformation. Like we will every Friday, below is a comprehensive update of what we observed and what we forecast for the immediate future.
The widespread outbreak of COVID-19 as a global pandemic has rocked the financial sectors and challenged the way we do business. Like many, we view this as a short-term event and believe the long-term outlook for fund finance remains more than promising. Yet it is in these rare times that we find ourselves more closely considering contractual terms to govern uncertainty. We outline here three key topics to address the current disruption: electronic signatures; contractual time limits; and managing potential breaches.
As the black swan event – in the form of COVID-19 – rips through our world and the impacts on health, society and the economy pile up, we offer some thoughts on the current and likely near-term impact on funds and the fund finance market. We do so with full knowledge that it is impossible to predict the future ... but in the hope that this will help to stimulate your own thoughts.
PEI reports that some GPs may move to call capital to pay off outstanding balances on subscription lines to stay ahead of any potential liquidity challenges at LPs.
Private equity holdings have increased in portfolio weight for LPs after the declines in public markets, according to a Wall Street Journal report. Even though portfolios may now appear to be overweight private investments, LPs are mindful of not missing out on potentially attractive entry points.