In this Spring 2018 edition of our Fund Finance Market Review, we discuss noteworthy developments in the subscription credit facility and fund finance markets and provide our views on the continued proliferation of private credit funds. We also explore the various forms of credit support available in the fund finance space and analyze unencumbered asset pool facilities as well as fund financing for series LLCs.

Finally, we discuss customary default remedies available in fund finance and proffer a potential guide to the accompanying foreclosure process.

Fund Finance Market Review

Our outlook for the fund finance market for 2018 is positive, as we expect the market to build upon the successes experienced over the last calendar year. In 2017 strong credit performance, record-breaking fundraising and product expansion fueled significant market growth. In addition to a significant uptick in the number of traditional subscription credit facility (each, a “Subscription Facility”) closings, Mayer Brown closed a record number of alternative fund financings. As expected with any mature market, however, we did see episodic defaults and borrowing base exclusion events in 2017. Such defaults were primarily technical in nature, and the exclusion events were isolated in respect of individual investors (each, an “Investor”) and did not indicate broader systemic issues for the Subscription Facility market or the private equity fund (each, a “Fund”) asset class. Below, we expand on our views on the state of the fund finance market as well as current trends likely to be relevant in 2018.

2017 Fundraising and 2018 Outlook

Fund fundraising experienced a banner year in 2017. Investor capital commitments (“Capital Commitments”) raised in 2017 exceeded $453 billion, representing the largest amount of capital raised in any year, according to Preqin.1 This continues the upward trend experienced in 2016 and is only the second year ever in which...