- 71% of alternative investors believe that fund finance is 'vital' to remain competitive
- 68% believe demand for fund finance will continue to increase over the next five years
- Intertrust launches new advisory service to help investors establish fund finance facilities
Of those who currently use fund finance, almost three quarters (71%) believe fund finance is 'vital' to remain competitive, according to a new study commissioned by Intertrust, a global leader in providing expert administrative services to clients operating and investing in the international business environment.
Currently, four-in-ten (42%) alternative investors are already using a fund finance facility and almost a quarter (24%) say they would consider doing so in future while over two-thirds (68%) expect demand for fund finance to grow over the next five years. In response to the growing demand and the need for funds to remain competitive, Intertrust has launched a new independent advisory service, designed to help alternative investors establish fund finance facilities.
Of those who currently use fund finance, 88% say that it allows portfolio businesses to operate more efficiently; almost three-quarters (71%) cite fund finance as 'vital' for helping them to remain competitive and over half (59%) believe that it provides access to capital that they would struggle to secure by any other means. However, almost a third (30%) of respondents who indicated they had no plans to use a fund finance facility in the future said this is because they had no understanding of the product or its benefits.
In terms of the most popular features investors look for in a fund finance facility, the research shows that nearly half (46%) cited the ability to borrow against fund assets; 36% indicated a same day borrowing facility; nearly a third (32%) ranked transparency in the advance rate; and 29% selected pricing and the ability to borrow in multiple currencies and from multiple banks respectively.
Cliff Pearce, Global Head of Capital Markets at
Intertrust, said: "Demand for fund finance is set to
continue as commitment sizes continue to grow. Despite this, some
funds are missing out on realising the benefits of fund finance due
to a lack of understanding. This knowledge gap is something we are
keen to address to help GPs remain competitive."
"Our new service will allow clients to unlock the value of their commitments and assets, providing them with liquidity when and where they need it most. We work in partnership with clients, from the early stages of the transaction through to closing the facility. The fund finance sector is under served from an advisory perspective and this presents us with a unique opportunity to provide clients with unbiased advice and expertise in optimising the efficiency, structural and commercial aspects."
James Rock-Perring, Director of Fund Finance Advisory at Intertrust added: "While funds are good at attracting investor capital, they don't always have the relationships or knowledge to work their way around bank financing. Bank lenders specialise in servicing market niches, have no consistent strategies and differing product offerings, so investors frequently find that their facility is not sufficiently tailored to their needs Our new independent advisory service will help clients navigate the process of establishing fund finance facilities and open the door to a wider bank panel, specialised in that niche"
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