BarbriSFCourseDetails
  1. keyboard_arrow_leftBack

Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Thursday, August 10, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00

This course is $0 with these passes:

CLE
ALL

This CLE webinar will discuss various aspects of due diligence which should be conducted in fund finance transactions, including subscription credit facilities (SCF) and net asset value (NAV) credit facilities. The panel will describe some of the current diligence practices typically involved in each type of credit facility and discuss potential changes to due diligence in these fund financing transactions.

Faculty

Mimi C. Cheng
Partner
Simpson Thacher & Bartlett LLP

Ms. Cheng is a Partner in the Banking and Credit, Fund Finance and Backleverage and Investment-Backed Financing Practices, and has extensive experience counseling private equity funds, investment banks and other large financial institutions on the use of leverage products secured by, or referencing, public and private investment property. She regularly advises on financings designed to facilitate and support fund investment activities, including subscription facilities, NAV facilities, hybrid subscription and basket facilities, margin loans and other forms of backleverage. Ms. Cheng has represented clients including BlackRock, Blackstone, KKR, KSL Capital Partners, JPMorgan, Silver Lake Partners and Sixth Street Partners.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio
J. Eric Holland
Partner
Miscellaneous
Jennifer J. Levitt
Partner
Simpson Thacher & Bartlett LLP

Ms. Levitt is a member of the Banking and Credit Practice. She regularly represents financial sponsors in connection with debt financings for their private equity, real estate, infrastructure, mezzanine debt and other investment funds. Ms. Levitt has extensive experience in complicated financings designed to provide fund-level leverage to facilitate and support investment activities, including subscription facilities, NAV facilities, margin loans, other forms of back-leverage and GP stake investments. She has represented clients including BlackRock, Blackstone, Carlyle, Centerbridge, JPMorgan, KKR, KSL Capital Partners, Oaktree Capital Management, Silver Lake Partners and Sixth Street Partners.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio

Description

Fund financing transactions have traditionally been viewed as low risk, but recent incidents involving alleged fraud have caused concern for lenders industrywide and heightened the focus on due diligence in fund financing transactions. Lenders and their counsel must have a thorough due diligence process to follow for each type of transaction.

Due diligence reviews for SCFs are typically focused on four types of documents--subscription agreements, limited partnership agreements, side letters, and offering documents--with a focus on the enforceability of the documents and the security interest in the underlying collateral. Lender's counsel must determine the nature or identity of the investors, the number of investors, and the substance, length, and complexity of any side letters.

Due diligence remains important in NAV credit facility transactions as well and should include a review of: (1) the documents relating to the fund's underlying investments (e.g., a mortgage for a real estate fund), (2) the organizational documents for the borrower and any related parties (e.g., any fund guarantor), and (3) depending on the nature of the fund's investments, a collateral audit, on-site inspections, or appraisals.

Listen as our authoritative panel discusses due diligence of SCFs and NAV credit facilities.

Outline

  1. Due diligence in the current fund finance environment
  2. Due diligence for subscription credit facilities
    1. Subscription agreements
    2. Limited partnership agreement
    3. Side letters
    4. Private placement memoranda
  3. Due diligence for NAV credit facilities
    1. Documentation relating to underlying investments
    2. Organizational documents of borrower and guarantor
    3. Underwriting the collateral and facility

Benefits

The panel will review these and other important issues:

  • Why has due diligence become particularly important in the current fund finance environment?
  • What are the key provisions in a limited partnership agreement that could affect the ability of a fund to enter into an SCF?
  • What are some red flags that lenders should be aware of in conducting due diligence on a NAV or SCF deal?