Alternative Credit Council’s Post

An insightful article analyzes the key considerations for credit funds when operating as borrowers under NAV facilities, examining security structures, liquidity optimizations, and important due diligence factors for lenders. The intricate interplay between NAV funding and credit fund portfolios presents unique opportunities and challenges for long-term leverage strategies. James Tinworth, Emily Fuller and Jennifer Passagne | AIMA - The Alternative Investment Management Association https://lnkd.in/gvNYCnY4 #NAVLending #NAVLoans #FundFinance #PrivateDebt

International Comparative Legal Guides (ICLG) recently published an insightful article by Wesley Misson and Trent E. Lindsay, reviewing the fund finance market in 2023 and looking forward to 2024. Despite banking failures and elevated interest rates, the sector adapted, providing a stable market environment but raising the stakes for future allocations and investment strategies. With changes in capital structures and lending dynamics, the piece forecasts a more cautious but opportunistic entry into 2024. https://lnkd.in/eb67Xg_n #FundFinance #FundFinancing #FundFinancer

The directive amending the Alternative Investment Fund Managers Directive ("AIFMD II") has been adopted and will enter into force on 15 April 2024 with a transposition deadline two years later on 16 April 2026. AIFMD II tightens the regulatory framework governing managers of credit funds (so-called "loan-originating AIFs") and other funds originating loans as well as amends certain other rules applicable to all AIFMs. This article provides an overview of the main amendments introduced by AIFMD II. Please take a moment to review the article linked below. 🔗 If you have any questions, don’t hesitate to contact us: Jacob Høeg Madsen, Jeppe Buskov, Peter Schiøler Skaaring and Peter Kirkehei Qvist. #ExceedExpectations

The American Bar Association recently published an insightful article by Brent Shultz and Flora Go on the growing use of NAV facilities in fund finance. These facilities are becoming a critical tool for private equity and credit funds to manage liquidity challenges, especially amidst tightening market conditions. The piece explores how structured finance techniques are being adopted to attract capital providers, including insurance companies, while sharing perspectives from experts like Elizabeth Tabas Carson and Leah Edelboim. https://lnkd.in/etHtdUsT #NAVLending #NAVLoans #FundFinance #PrivateDebt

In a challenging market environment, secondary transactions, continuation funds, and NAV finance are all three ways in which funds managers can enhance their portfolios. But what are the considerations to keep in mind when employing these lifelines?  Find out more in our latest article: https://lnkd.in/d87vn7Rh #OptimisingFundFinance #GrowthPlaybook

Whether you are running your own business or looking to finance the purchase of an income generating asset 🏢, understanding the types of funding available and the optimal capital structure can be the difference between winners and losers. ↳ Too much debt at the wrong point in the interest rate cycle could be a major credit risk and put strain on cash flows. ↳ Too much equity could result in a higher cost of capital than what would be optimal and lower growth/return on equity. ↳ Hybrid/mezz has a role to play particularly where founders have limited funds of their own but want to avoid the possibility of diluting their shareholding. Getting the mix right can accelerate growth and increase returns. Getting the mix wrong can be detrimental. https://lnkd.in/dcmpc7QS

“At the Milken Institute’s Global Conference this week, a little-known risky financial tool became the subject of a hot debate among Wall Street titans. Many private equity firms have quietly begun mortgaging their investment funds, piling leverage upon leverage. In other words, they’re taking out loans against the businesses they’ve already taken out loans to buy. At a time when dealmakers are desperate to raise new cash after the boom of the pandemic era, this mechanism — known as a net asset value loan — is allowing them to do it overnight. More P.E. firms are using the tool as they set out to raise their next funds, especially those confronting a hurdle during a slow period for dealmaking: They have yet to return cash to the limited partners they tapped for their last round.” https://lnkd.in/eaGY23px

NAV lending is transforming fund finance in the post-financial crisis era. Discover how NAV facilities are fueling growth and providing liquidity for alternative investment funds.

In today's unpredictable landscape, Money Market Funds continue to offer a reliable solution. Discover how your treasury peers leverage the ICD Portal to trade Money Market Funds and navigate market uncertainties by reading this latest article from Treasury Today Group.

AIFMD 2.0, effective April 15, 2024, brings significant regulatory changes for Alternative Investment Funds (AIFs) and Alternative Investment Funds Managers. In this OnPoint, Dechert's Gus Black, Richard Frase, Marianna Tothova and Philippa List explore the transitional exemptions available under AIFMD 2.0 for certain existing AIFs that originate loans, and what asset managers ought to be doing now so that they can start to make the appropriate business preparations.