PERE published an article on March 7, titled “Warning bells sounded over GFC-style leverage use.” The article discusses Asia private real estate managers using strategies predicated on leverage levels reaching 90 percent loan to value. The article mentions the use of subscription lines, which it lumps in with real estate mezzanine debt. The full PERE article is available here.
Here are some updates to our Fund Finance Calendar.
MJ Hudson published a primer on subscription credit facilities titled “Line Dance: The Rise of Subscription Credit Lines in Private Funds.” The article summarizes many of the views expressed in the financial press in the last two years and gives a summary of the ILPA guidelines. For a primer, it is relatively current and does a nice job of summarizing the issues (well, maybe theoretical issues). While thoughtfully prepared, we thought it unfortunate that there is again a suggestion to investors that subscription facilities impair transferability of their LP interests. There is also a suggestion to regulators that the product creates systemic risks. We do not agree with those suggestions. A copy of the article is available here. A copy of Cadwalader’s response to an article making similar insinuations about investor transfers and systemic risk is available here.
The fund finance market has certainly supported the FFA's change in venue for the Global Symposium to Miami. The event has now been sold out for several weeks and 600 people are currently registered. Market participants have been scrambling to find sponsorship passes that have yet to be allocated. The FFA is extremely appreciative of the support the market has given the event and regrets that facility constraints are preventing further registrants. You can get on the waitlist for the event here.
Bloomberg this week reported on a $3 billion subscription facility for SoftBank Group’s Vision Fund. The article states the facility was led by Goldman Sachs and Mizuho Financial Group and also discloses reported lender participants. The article is available here.
Wells Fargo annouced a large round of promotions in its Subscription Finance group this week.
Investec Bank appointed Tom Glover to head the bank's fund finance business in New York.
Here are some updates to our Fund Finance Calendar.
In the short period since their introduction in 2015, ICAVs have become the structure of choice for Irish funds. This is down to the flexibility they offer from both a tax and legal perspective. Somewhat inevitably, the increase in the use of these vehicles is now translating into the fund finance space, with an increasing number of borrowers in capital call facilities being ICAV entities.
The Fund Finance Association (FFA) Next Gen Network recently held its inaugural event in New York City. About 75 young professionals working in the fund finance industry – bankers, private market professionals and lawyers – convened at First Republic Bank’s New York City offices for an evening of introductions and libations.
The Fund Finance Association's Women in Fund Finance group announced its next event this week. Titled “WFF London – Return to Work Discussion and Networking Event,” the breakfast reception is scheduled for 8:30 a.m. on Wednesday, March 13, 2019, at Reed Smith LLP’s office in London. To register or for more information, click here.