Security
Investor notices
General partner commitment 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 Guernsey's fund finance market.
While a typical subscription facility security package in Guernsey consists of the usual security over capital call rights and the account(s) into which capital contributions are deposited, recently there have been fund finance transactions where, in some instances, the alternative security packages put in place have been novel in Guernsey. Some examples include:
- security over distribution rights arising under the fund's limited partnership documents, coupled with a contractual ability for the lender to be registered as a limited partner of the fund, if it requires; and
- cascading capital call security granted by each entity in a fund structure to secure the capital contribution that each entity has committed to its underlying fund, with the ultimate beneficiary (and borrower) of such security then assigning all security interests to the lender, as security for the loan monies.
Post Abraaj, lenders appear to be increasingly adamant about investors being notified individually of the creation of capital call security. Where a corporate administrator has been appointed under a fund's limited partnership agreement to legally accept notices on behalf of investors, lenders still require notices to be served on each investor individually. Often, an acceptable approach is for a notice to be delivered to the corporate administrator acting for and on behalf of each investor, and the general partner of the fund to upload the investor notice to the fund's investor portal, subsequently providing the lender with evidence or confirmation that this has been done.
General partner commitment and net asset value facilities
The majority of facilities being seen are subscription facilities, although general partner commitment facilities and, increasingly, net asset value facilities, have also been seen.
For further information on this topic please contact Paul Chanter, Christopher Jones, Michaela Jesson or Jane Hogan at Ogier by telephone (+44 1481 721672) or email ([email protected], [email protected], [email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.