NAV & Hybrid Legal Updates
Foundational Legal Updates
All NAV & Hybrid Legal Updates
Payment-In-Kind Interest in Fund Finance Transactions
Payment-in-kind interest (“PIK interest”) is the concept of deferring interest owed by a borrower under a credit facility to a later date. Instead of making regular cash interest payments to the lender in the ordinary course, the borrower can elect to satisfy interest payments by incurring additional debt under the facility and reclassifying interest owed as principal loan obligations.
Sponsor-Arranged Investor Loan Programs
Introduction Large family offices and institutional investors are increasingly utilizing NAV loans on their alternatives holdings as a portfolio management tool. As allocations to alternatives have scaled, so, too, has...
Valuation Reports and Fairness Opinions in Fund Finance: Purpose, Application, and Key Considerations
As the fund finance market continues to mature and transactions grow in complexity, valuation reports (or “valuations”) and fairness opinions have become increasingly relevant in the deal landscape. These third-party...
Transfer Restrictions in NAV Credit Facilities: Impact on Collateral and Market Solutions
A common hurdle in Net Asset Value (NAV) credit facilities is the presence of transfer restrictions on equity interests. In this Legal Update, we explain how these transfer restrictions operate in NAV credit facilities, their practical implications, and potential solutions for navigating their complexities.
The Spectrum of Loan Portfolio Backleverage Options: A Primer for Private Credit Funds
There is a spectrum of potential financing structures for a private credit fund (a “Credit Fund”) to obtain liquidity, including at various levels in the fund structure, such as at...
NAV Credit Facility Primer: A Fund Finance Guide
Net Asset Value Credit Facilities: An Overview The Advantages of Net Asset Value Credit Facilities NAV Credit Facilities: The Spectrum of Collateral Structures Nav Facilities: Appraisal and Valuation Challenge Rights...
Evolving Competitor Definitions in Fund Finance
Recent developments in fund finance documentation reflect a significant shift in how insurance companies are treated under assignment provisions. Traditionally, “competitor” definitions have served to restrict loan assignments to entities...
NAV Facilities: The Institutional Limited Partners Association’s New Guidance
Net asset value (“NAV”) facilities are credit arrangements underwritten by the value of a fund’s investment portfolio, in contrast to subscription credit facilities (“SCFs”), which are underwritten based upon undrawn...
The Intersection of NAV and Margin Loans: Single Asset and Concentrated Asset Pools
Over the last several years, a need has arisen in the fund finance market, which caters to private equity, venture capital, family offices, and other investment funds (“Funds”) and their...
NAV Facilities: Appraisal and Valuation Challenge Rights
Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower’s portfolio of investments, where the amount available for borrowing is based on the value of such underlying...