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.
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.
In today’s video version of Fund Finance Friday: Industry Conversations, Tim Hicks, Partner at Cadwalader, provides a market update on the subscription facility sector, and Pramit Sheth, Managing Director at Kroll Bond Rating Agency, gives color on the types of fund finance transactions they are rating and what they are seeing in the market post-COVID. Additionally, Laura Clark, the CEO of the United Way of the Central Carolinas, discusses the tremendous uptick in community needs, what the United Way is doing to try and help our challenged neighbors from both a social justice and COVID response perspective, and how we can all contribute and help. Cadwalader’s Mike Mascia hosts.
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Conyers recently published an article, “The Cayman Islands Private Funds Law: A Pre-Summer Holiday Lender Checklist,” which lists practical lender due diligence items for prospective PF Law compliance and discusses the difference between filing and confirmation of registration.
This week Fund Finance Partners published an update on using management fee lines during the present crisis for working capital, support for GP commitments, and as a source of acquisition finance.
A few FFF editions ago, I described how the appetite for NAV-backed facilities had increased significantly across the private markets in a post-COVID world and how the structures of these facilities were becoming more flexible as they attracted the interest of larger managers, particularly in the primary private equity space. However, whilst facility terms and structures are evolving, the fundamental concept and benchmark underlying these transactions is the “loan to value” ratio. In this piece, I focus on how managers are valuing their portfolios, where there may be a disconnect between the usefulness of the valuation for investors on the one hand and financiers on the other, and where additional protections are being sought by lenders in the market underwriting new NAV-financings.