The Use of Preferred Equity in Fund Finance
The current “higher for longer” interest rate environment has had a range of consequences for fund finance participants,...
Legal Update Archive
LEGAL UPDATES
Preferred Equity: Another Option in the Fund Finance Toolkit
The market for private equity (PE) secondaries, or the buying and selling of pre existing PE fund interests,...
Analysis of the ILPA Model Fund Agreement
On October 30, 2019, the Institutional Limited Partners Association (“ILPA”) publicly released a model Limited Partnership Agreement for...
Fund Finance Market Update: NAV Credit Facilities and COVID-19
I. Introduction The outbreak of the current novel coronavirus (also known as COVID-19) has caused significant and wide-ranging disruptions...
Fund Finance Market Update: Fund Finance in the Era of COVID-19
We hope that everyone is keeping safe and healthy in these unprecedented times. As the world adjusts to...
ILPA Model Limited Partnership Agreement: Fund Finance Considerations
To assist limited partners (“LPs”) and general partners (“GPs”) establishing limited partnership agreements (“LPAs”) for private equity funds...
Issues for Administrative Agent to Consider
October 22, 2019 Issues for Administrative Agent to Consider By Mayer Brown In a typical syndicated credit facility,...
Subscription Credit Facilities: A Comparison of Borrowing Base Structures
Subscription credit facilities, which are lines of credit in favor of private equity and similar investment funds primarily secured by the capital commitments of the fund’s investors, are most commonly structured using a borrowing base structure similar to other types of asset-backed loans.
Utilizing Repurchase Facilities and Related Protected Contracts as an Alternative Source for Fund Liquidity
Subscription-backed credit facilities (also known as “capital call” or “capital commitment” facilities, and each a “Subscription Facility”) have served as the cornerstone of the fund finance market for the past 20 years. Loan availability under a Subscription Facility is subject to a borrowing base, which is typically tied to the remaining amount of the pledged uncalled capital commitments of investors satisfying certain eligibility requirements, multiplied by an advance rate.
Model LPA Provisions for Subscription Credit Facilities
The first step in determining if a subscription credit facility, often called a capital call facility (a “Subscription Facility”), is a viable option for a private equity or similar investment fund (a “Fund”) is to diligence the limited partnership agreement or other organizational document of the Fund (the “LPA”). Subscription Facility lenders usually require that specific concepts and language be included in an LPA in order to provide a Subscription Facility without additional credit support, such as investor consent letters.