New to fund finance or know someone who is? Here's an updated guide to primers we've previously published in Fund Finance Friday.
Capital Commitments, LPA Terms, and Related Investor Considerations
A Waiting Game…
Annual limits on capital calls in the LPA.
Cross-Referenced Debt Limits
LPA leverage limits that may be revised by advisory committee
consent.
Not All Commitments Are Treated
Equal
Investor commitments structured as both a loan commitment and
equity commitment.
(Over) Call Me, Maybe
Types of overcall limits and their prevalence.
LP Sanctions Risk in Fund Finance: Issues for Lenders
to Consider
Issues that arise once an LP has been identified as subject to
sanctions.
European Financing Structures Involving UHNWIs and
Family Offices
An overview of financing ultra-high net worth individual private
fund interests in Europe.
Renewals: Commitment Period and Key Person Event
Considerations
Reviewing commitment period and key person event capital call
limitations at facility renewal.
Side Letters
Side Letters: A Round-Up of Common Issues for
Lenders
Common side letter terms most relevant to subscription lenders.
Declaration of Sovereign Immunity: Navigating Side
Letter Provisions
An overview of most favored nation, sovereign immunity and cease
funding rights in side letters and their implications for
subscription facilities.
Immunity Unlikely
Sovereign immunity and related concepts.
Political Contributions Cease Funding
Rights
Cease funding rights tied to political contributions by a fund or
its affiliated personnel.
Credit Agreement Concepts
It's My Equity, and I'll Pledge If I Want
To
The exclusion event related to an investor encumbering its equity
interest in a fund.
Concentration-Linked Overcall
Limitations
Applying a use-of-proceeds limitation to address an investment
concentration-linked overcall limit in the LPA.
Letters of Credit – An Increasingly Popular
Tool?
Letters of credit in the subscription facility context.
Cash Collateralizing Letters of
Credit
The interplay between outstanding letters of credit and credit
facility repayment at maturity.
Call Me MAE-Be?
Material adverse effect clauses.
Whose Cash Is It Anyway?
Negotiating the available sources of payment available to service
certain required payments by the borrower.
You're Out!
Lender replacement provisions in the credit agreement.
The Involuntary Bankruptcy Exclusion
Event
Lender exposure related to an investor's involuntary
bankruptcy during the typical cure period.
The Intersection of Overcall Limitations and the
Investor Default EOD Trigger
The interrelationship between the cumulative default EOD and a
fund's percentage overcall limit.
April Showers Bring … Umbrella
Facilities?
Considerations in structuring umbrella facilities.
Umbrella Academy: A Guide to Umbrella Facilities in
Fund Finance
An update on applying an umbrella structure in various
contexts.
Top 10 Items to Consider When Structuring Your ESG
Facility
A top-10 list of structuring considerations for ESG facilities.
SONIA: A Primer
Differences between SONIA and SOFR, plus key terms for loan
documents.
Syndication Considerations: Elements, Issues and Hot
Topics for Bringing New Lenders into Deals
Borrower and motivations for syndication and a summary of how a
loan is syndicated by amendment or joinder.
Minority Lender Considerations
Balancing alignment of interest and control terms for minority
lenders in syndicated loans with a cornerstone lender or
lenders.
NAV Covenants and Subscription
Lines
Making use of NAV covenants in subscription lines when unfunded
capital commitments have been largely drawn down.
Intercreditor Arrangements in Fund Finance
Transactions
An introduction to taking a second lien on collateral (or
consenting to a second lien on collateral) by using an
intercreditor agreement.
Fast Cash: Swingline Loans in Fund
Finance
A review of how swingline loans are incorporated into a revolving
credit facility.
Blockers and Tackling
Constituent document and collateral structure considerations
related to blockers.
NAV Facilities
Structuring Security for NAV
Loans
Security for NAV loans and related concepts in the lender's
disposition of collateral.
Considerations for Post-IPO NAV
Financing
Considerations specific to post-IPO shares pledged as
collateral.
Blurred Lines
NAV facilities to primary funds.
An Introduction to Secondaries
The private equity secondaries market.
Considerations in NAV Transactions When Collateral
Includes Transfer-Restricted Assets
Dealing with transfer restricted assets in structuring NAV
financings.
‘NAV'igating Cayman Share Security –
Lender FAQs
A question-and-answer overview of Cayman pledges of shares.
‘NAV'igating Cayman LP Interest Security
– Lender FAQs
A question-and-answer overview of taking security over Cayman LP
interests.
Asset Valuation Issues for NAV
Loans
Focusing on how private company and private fund interests are
typically valued in NAV loan facilities.
Other Borrower and Transaction Structures
Top Considerations for Structuring an
SMA
Key considerations in lending to an SMA.
One Is the Loneliest Number
Unique issues lenders face in lending to SMAs.
Key Issues for Loans to '40 Act
Funds
Common issues that are addressed in loan documentation when the
borrower is a registered investment company.
Get To Know Your BDCs
BDC basics and subscription facility considerations.
A Closer Look at Management Fee
Facilities
Management fee line collateral, due diligence, credit support and
common terms.
Getting Personal — Lending to Fund
Executives
Diligence and structuring points related to loans to fund
executives in a European context.
Diligence Considerations for Fund Executive
Facilities
Due diligence demands with respect to the executives and their
rights to receive distributions in their capacity as LPs of the
co-invest vehicle.
Diligence Considerations for GP
Facilities
Due diligence requirements specific to GP facilities.
Financial Covenant Protection in GP
Facilities
Structuring of financial covenants in the context of GP facilities
in Europe.
Lending to Venture Capital
Funds
Points to keep in mind when structuring credit facilities with
venture capital funds.
Open-Ended Funds: A Few SCF
Considerations
Distinguishing factors of open-ended funds.
Preferred Equity — The Best of Both
Worlds?
Preferred equity, particularly with regard to secondary
investors.
ESG Facilities
ESG-Linked Fund Finance: Distinctions From Typical
Subscription Facilities and Trends in Adoption (Part One of
Two)
Tracing the path of the ESG fund financing market from inception to
the current framework for pricing and performance measurement.
ESG-Linked Fund Finance: Two Most Prevalent Structures
and Challenges With Use (Part Two of Two)
Understanding and implementing either a use-of-proceeds or a
performance-based ESG structure.
Top 10 Items to Consider When Structuring Your ESG
Facility
Addressing the credit facility terms that are most relevant in the
ESG facility context.
The ABCs of ESG
A summary of the fundamentals of ESG fund finance.
Other Transaction Documents
Payoff Letters – Routine until
Rocky
Fundamental legal principles underlying the use of and the market
practice of payoff letters.
Investor Letters: Key
Provisions
Investor Letters continue as a credit support tool for certain
types of facilities.
Get Well, Keep Well
Credit enhancement through guaranties, equity commitment letters
and keepwell agreements.
Equity Commitment Letters under English Law: Beware of
the Pitfalls!
Key aspects of equity commitment letters and implications for
lenders.
It Is OK to Be Noteless
The motivations for requesting a note, considerations that follow,
and the alternative of going “noteless.”
Other General Topics
Ten Things Every Fund Finance Banker Should Know About
the UCC
UCC building blocks relevant to fund finance.
ERISA in Fund Finance
An overview of ERISA and related concepts in fund finance.
A Brief Primer on Cayman
Security
An introduction to capital call security interests in the Cayman
Islands.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.