What are the latest developments in this fast-expanding part of the credit market?
All forms of fund finance – and especially NAV lending – have continued to grow strongly, offering a wide range of liquidity solutions to GPs and LPs alike. As we report, applications for fund finance have broadened to encompass the likes of continuation vehicles and structured finance. Long gone are the early days of the market when fund finance was more or less synonymous with subscription line facilities. But, as demand for fund financing and NAV lending has increased, so too has supply – we examine the consequences of rising competition.
THREE FORCES RESHAPING FUND FINANCE
Three forces reshaping fund finance
The growth of continuation vehicles, evergreen funds and securitisation are contributing to the changing face of the fund finance market.
The CV boom reaches fund finance
Continuation vehicles present an interesting opportunity for fund finance, but concentration risk and a reluctant investor base pose a challenge.
Evergreen funds meet the moment
A run on redemptions in the private credit world has highlighted the importance of diligencing gating mechanisms in fund finance facilities.
Securitisation in fund finance gains traction
The growth of securitised products is attracting more investors into the space.
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REGION FOCUS
Asia-Pacific is a promising market for fund finance
As fundraising has slowed and exits become harder, fund finance in the region has never been busier, with GPs increasingly tapping into sources of liquidity.
PREVIOUS COVERAGE
Lending directly into private equity funds has taken off since the covid-19 pandemic, providing much-needed flexibility as GPs and LPs navigate more complex and volatile conditions to exit their portfolio companies. In this special report, we look at what is driving the expansion of fund finance and NAV lending, how the area is already seeing its use evolve into a tool for managing funds over longer periods and what regulatory hurdles might lie ahead as the SEC turns its eyes towards fund leverage.
NAV finance: A major value creation tool
A difficult M&A market means private equity funds are holding portfolio companies for longer, but NAV finance could turn this into an opportunity.
NAV loans and sub lines take a borrower-friendly turn
Supply and demand dynamics in the fund finance space have been turned on their heads in the two years since the regional banking crisis. It’s giving GPs more choice than ever before.
Alpha Fund Finance on why new capital sources demand lender flexibility
Lenders are responding to an increase in non-institutional investors and semi-liquid vehicles, while GP borrowers are opening up to new sources of fund finance, say Edward Beecham and Megan Livingstone of Alpha Fund Finance.
Barings on the many sub-asset classes within fund finance
Generating alpha and being able to quickly put capital to work are key advantages of fund finance, says Matt Hansford, European head of Barings Portfolio Finance.
NAV loans are the next frontier of private credit’s growth
Net asset value lending has evolved to require more disclosures and alignment with investors.
Davis Polk & Wardwell: Supply, demand and creativity drive fund finance innovation
An expanding borrower universe and new entrants on the lending side are driving innovation in fund finance, according to Meyer Dworkin, head of fund finance and structured credit; David Kennedy, partner; and Kwesi Larbi-Siaw, counsel at Davis Polk & Wardwell.
Arcmont on the growing appeal of NAV for borrowers
GPs are turning towards NAV financing as the market demands more flexible solutions and offers diversification for investors, says Arcmont’s head of NAV Financing, Peter Hutton.
Lean times for green loans?
Given changing attitudes to ESG, PDI explores whether sustainable loan structures still have a future in the world of fund finance.
KBRA on why fund finance continues to perform
Rated subscription lines and NAV loans are a strongly performing area, says Thomas Speller, senior managing director, global head of fund finance at KBRA.
Fund finance is a market in flux
Depressed fundraising hits subscription finance, but M&A slump boosts demand for NAV.
The changing shape of fund finance
From a regional banking crisis to regulatory scrutiny, we track five trends set to shape the course of an industry.
Adapting to the new norm
As the regional banking crisis abates, subscription finance settles into rhythm.
The hunt for talent
Could a lack of expertise curtail the growth of the fund finance market?
What democratisation could mean for fund finance
Can retail investors offer sub line lenders the security they require?
The ever-expanding world of NAV
From limited partners to continuation vehicles, the borrower cohort for NAV finance is widening.
NAV finance under scrutiny
As the NAV finance market continues to grow, it is attracting increasing attention – and not all of it positive.
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