Preferred equity is a tool employed by dedicated funds and traditional secondary investors to provide liquidity and funding solutions to managers with portfolios of assets looking for a solution which allows them to retain the majority of the upside and avoid giving up control of the portfolio in a down-side scenario, either where the manager is looking to accelerate liquidity or invest more capital.
In common with many other LMA facilities, subscription/capital call facilities include standard information covenants relating to provision of general financial information (in particular, annual and quarterly accounts), provision of compliance certificates and other specific “information” covenants covering other matters. However, they also differ from other LMA-based facilities in a number of respects. This article in our series seeks to summarise the main areas of difference and the considerations which apply in particular to this part of the subscription/capital call facility.
At the cusp of a new decade, the flood of capital into private funds risks becoming too much of a good thing. None of this is news to astute FFF readers: Equity strategies in many cases face a “buy high” proposition given rich buyout target valuations while debt strategies operate in a flat forward curve matrix with uninspiring credit fundamentals.
Loyens & Loeff partners Vassiliyan Zanev and Antoine Fortier-Grethen summarize fund financing in Luxembourg in a recent primer.
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Veteran fund finance banker Jonathan Peiper joined Mizuho Americas last month as a Managing Director to lead its subscription finance business. |
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Westin Brake joined Bridge Bank as a portfolio manager in its Equity Fund Resources Group, where he will focus on growing and managing the group’s subscription book and capital call lines to SBICs, private equity and venture capital funds. |
Here are updates to our Fund Finance Calendar.
We will not publish Fund Finance Friday next week but will be back on December 6. Enjoy the good food and football and, of course, special times with family and friends.
Potential revisions to the private placement framework continue to percolate at the SEC. Last week, in remarks to the SEC Small Business Capital Formation Advisory Committee, SEC Chairman Jay Clayton advocated for a critical review of the existing framework of registration exemptions, with an eye towards providing “Main Street” investors with the same extent and quality of investment opportunities as institutional investors.
The United States House of Representatives Financial Services Committee this week took up three bills that would regulate the private equity industry.
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This week we connect with Arnaud Arrecgros, a Finance partner in Maples and Calder (Luxembourg), the Maples Group's law firm in Luxembourg. Arnaud has over 13 years of experience advising on cross-border financing and banking transactions, including fund finance deals in connection with the setting up of bridge and capital commitment facilities, corporate debt facilities, acquisition, asset and real estate financing and restructurings, and securitisations, as well as capital markets matters. |
