Subscription credit facilities, commonly referred to as “sub-lines” or “capital call facilities,” are a cornerstone of private equity finance. These facilities are secured by a bespoke collateral package that protects lenders...more
With four major interest rate benchmarks ceasing to be published by the end of last year, we thought now would be a good time to provide a refresher on alternative currency rates. In this article we first discuss the key...more
In the evolving fund finance market, lenders are constantly assessing ways to mitigate risk and enhance credit support in order to provide for the smooth operation of subscription-based credit facilities. One such credit...more
EXECUTIVE SUMMARY - Subscription credit facilities rely on the obligations of investors to a private investment fund (“Fund”) to contribute their capital commitments to the Fund when called. From a subscription credit...more
Subscription credit facilities are a widely utilized product in the fund finance market, offering sponsors access to a reliable source of financing to bridge capital call and to lenders collateral backed by investors’ capital...more
Jersey and Guernsey (collectively, the "Channel Islands") remain popular for both private equity buyout structures of UK and international corporate groups across various industries and asset classes, and for leverage...more
The recent closing by Goldman Sachs of its highly innovative and market leading US$475 million “capital call” securitisation of subscription credit lines has generated a lot of interest in both fund finance and structured...more
Subscription credit facilities usually require the ability to make, receive, and enforce capital calls on a pro rata basis, whether directly or indirectly through a cascading pledge structure, on 100% of the pool of capital...more
A subscription credit facility is secured in part by the fund’s and its general partner’s (“GP”) right to call unfunded capital commitments from the fund’s investors, to receive capital contributions once funded and to...more
EXECUTIVE SUMMARY - As part of its Climate Accountability Package, California passed a law last year that creates disclosure requirements related to greenhouse gas (“GHG”) emissions for thousands of U.S. companies,...more
Executive Summary - Over the last several years, a need has arisen in the fund finance market, which caters to private equity, venture capital, family offices, and other investment funds (“Funds”) and their sponsors, for...more
The credit agreement for a subscription credit facility will list several conditions precedent that are required prior to the credit agreement becoming effective and/or the first extension of credit occurring thereunder....more
EXECUTIVE SUMMARY - Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower’s portfolio of investments, where the amount available for borrowing is based on the value of such...more
The key component of any subscription credit facility is the underlying capital commitments that are pledged to secure the facility. Virtually every lender will require some level of over-collateralization – meaning, investor...more
Executive Summary - Net Asset Value (“NAV”) credit facilities are a tool that borrowers may use to access financing based on the value of their underlying investment portfolio. The users of these facilities are generally...more
We have said it before – the “credit cornerstone” of a subscription credit facility is the limited partnership agreement (the “LPA”) – it is the primary contract, together with any side letters, governing the relationship...more
EXECUTIVE SUMMARY - Private equity structures often use “blockers” to achieve certain tax benefits. In this Legal Update, we explain what blockers are, how they may be used in a subscription credit facility, and what...more
Section 23A and Super 23A can create additional complications for lenders in the fund finance market. Intended to protect the stability of financial institutions by restricting transactions with affiliates, Section 23A and...more
EXECUTIVE SUMMARY - In the evolving landscape of the subscription credit facility market, the introduction of fraud allegations by an investor against a fund as a new exclusion event marks a pivotal shift....more
Fund-level subscription-secured revolving lines of credit are a well-established instrument in the toolkits of a variety of private equity fund sponsors and managers, including for venture capital funds, hedge funds, debt...more
Because banks receive favorable capital treatment when a credit facility’s tenor is shorter than one year, lenders increasingly offer financing with 364-day tenors and uncommitted extension option terms of up to 364 days. In...more
High net worth feeder funds (“HNW Feeder Funds”) have emerged as a strategic resource for private equity funds seeking additional sources of capital. The HNW Feeder Fund structure often involves a partnership between private...more
Recallable capital has become an increasingly common concept in subscription credit facilities. In this Legal Update, we explain the concept of recallable capital and its role in subscription credit facilities, as well as...more
The primary purpose of a capital call facility is to provide bridge financing to a fund borrower that may be drawn upon, in lieu of calling capital, to make investments in accordance with the fund’s business purpose. In...more
Goodwin is proud to be a platinum sponsor of the 2024 Global Fund Finance Symposium. As next week’s conference approaches and our clients, colleagues, and friends head toward Miami, the Goodwin Fund Finance team has paused to...more