Welcome to this week’s Spotlight, where we introduce you to Derrick Lau, counsel in our Hong Kong office. Among the matters Derrick regularly advises on are credit and special situations funds, private equity funds, bank lenders from new money investments to consensual debt workouts and restructuring. He has extensive experience working on cross-border transactions, having previously worked in the firm's London office
Let’s learn more about Derrick, his practice, and Hong Kong's finance market.
I was first drawn to fund finance during an 18-month secondment to our London office between 2017 and 2019. By that time, the London fund finance market had developed significantly, with NAV and hybrid facilities becoming increasingly prevalent. Looking back, the secondment provided invaluable experience and exposure to a sophisticated and rapidly evolving market. Upon returning to Hong Kong, I have played a key role in expanding our fund finance practice, advising primarily lender clients on fund financing solutions for private equity, private credit and venture capital funds.
Building on my earlier observations the Asian fund finance market has historically been driven by subscription line facilities, but we are now seeing growing demand for NAV and hybrid structures as fund portfolios mature and financing needs become more sophisticated. One closely related area of growth is financing for continuation vehicles and the broader GP-led secondaries market. With slower exits across Asia, sponsors are increasingly holding high-quality assets for longer and turning to continuation funds as a means of generating liquidity, managing portfolio assets and providing alternatives to traditional IPO and trade sale exits.
Another significant driver of growth is the expansion of private credit across the region. We have seen a notable increase in private credit activity, fuelled by a more selective bank lending environment in sectors such as real estate, and a growing demand for alternative sources of capital. As private credit funds continue to scale, we expect increased demand for NAV facilities, asset-backed financing solutions and back-leverage structures, creating further opportunities for the development of the fund finance market in Asia.
Tell us about your capabilities in the region?
In Hong Kong and Greater China, we advise banks, alternative asset managers and fund sponsors on the full spectrum of fund finance products, including subscription line, NAV and hybrid facilities, management fee facilities, LP financings as well as back leverage financings. Our practice is particularly focused on cross-border transactions involving Asian and offshore fund structures and benefits from close integration with our market leading investment funds teams in Hong Kong and Singapore.
Beyond fund finance, we regularly advise private credit and special situations funds, private equity sponsors and insolvency practitioners throughout the credit lifecycle, from new money investments and leveraged and acquisition financings to consensual restructurings, enforcement actions and formal insolvency processes.
What are some of your most recent noteworthy deals?
On the fund finance front, in addition to the usual roster of subscription line facilities, we acted for the sponsor on a hybrid facility that was made available to an open-ended Asia focused real estate PE fund and a number of GP-led management fee facilities.
Outside of our fund finance practice, we acted on two market leading TLB (Term Loan B) financings, where the documentation terms converged towards US and European standards with greater use of covenant-lite structures and this has helped establish a precedent for covenant-lite TLBs in Asia going forward.
What book, movie, or TV show would you most recommend to others?
I'd recommend the book The Next Renaissance by Zack Kass. As AI becomes increasingly relevant across every industry, I think it's important to understand not only the technology, but also its broader impact on society. What I liked about the book is that it takes a balanced but ultimately optimistic view of AI, arguing that it can enhance rather than replace human capabilities. I also had the good fortune of moderating a Q&A session with Zack at our Asia Regional Conference in June, and I definitely learned a lot from him.