Single investor strength
Equity commitments
ESG
Hybrid and net asset value facilities
The global fund finance market has shown much resilience over the past 18 months. This article outlines the recent developments in Jersey's fund finance market.
There have been a number of instances where lender credit approval has focused on the strength of a single investor (in a multi-investor fund), sometimes supported with an investor letter. As a result, such lenders have had to navigate capital call mechanics (which generally contemplate only pro rata calls across all investors, instead of discretionary calls against selected investors) in the context of capital call security accordingly.
There have been some instances of investor strength superseding the usual capital call security package, with an equity commitment letter or agreement being offered (and accepted) instead.
Facilities with an environmental, social and governance (ESG) incentive margin have started to see reductions baked in or a covenant included for both the lender and the borrower to come to the table to negotiate ESG incentives when the lender's ESG framework is confirmed (for lenders that are still working on their internal policies).
Hybrid and net asset value facilities
More net asset value and hybrid facilities are being seen, with lenders seeming to be happy with the credit worthiness of the assets of the relevant fund(s) when the commitment period has ended or is near to ending.
For further information on this topic please contact Katrina Edge, Simon Felton, James Lydeard or Kate McCaffrey at Ogier by telephone (+44 1534 504 000) or email ([email protected], [email protected], [email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.