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The Matheson team thoroughly enjoyed the European Fund Finance Symposium in London last week. It was a pleasure to connect with industry colleagues (old and new) and discuss the trends, challenges and developments we are seeing in the fund finance market. We discussed a number of varying topics including the following:
- Fundraising challenges, tariffs and difficult exit environments continue to impact fund finance (as well as other) markets. There is, however, optimism arising from interest rate cuts by the Federal Reserve with fundraising challenges predicted to ease in 2026 and 2027 and analysts are still seeing continued growth in private markets with private equity and infrastructure (particularly data centres) growing at a faster rate than alternatives.
- As has been the theme for the past couple of years, the fund finance market continues to evolve, in part to address these challenges; the secondaries market continues to grow, continuation funds continue to be used for certain assets, securitisation technology is being utilised (through, eg. rated note feeders and CFO structures), and lending to SMAs is becoming more prevalent in newer markets as they offer investors more control (and GPs are increasingly more open to provide more bespoke solutions to key clients).
- Regulatory updates, in particular CRD VI which will have an impact on non-EU fund finance lenders lending to Irish funds.
- Evergreen funds remains a topic of particular interest to the industry. There are particular considerations from a lending/securing point of view given the perpetual nature of the fund and depending on the frequency and nature of redemptions.
- NAV financings being used earlier in a fund's life as a powerful GP tool and an alternative to refinancing portfolio level debt or margin loans. The NAV panel discussed robust security packages, new entrants to the NAV market and slower financing processes. Sub-lines remain in demand despite a slower fundraising environment and GPs are seeking higher advance rates and more bespoke financings such as term loan tranches (rather than more traditional revolving facilities).
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