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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

    Tuesday, December 10, 2024

  • 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
CLE
ALL

This CLE webinar will discuss the recent and much anticipated release of new guidance by the Institutional Limited Partners Association (ILPA) regarding the use of net asset value (NAV)-based financing in private equity strategies. The panel will review the background and general parameters regarding ILPA's guidance and provide tips for market participants considering implementing these recommendations when deploying NAV-based facilities within their private equity strategies.

Faculty

LeAnn L. Chen
Partner, Co-Chair Finance Practice Group
Haynes & Boone LLP

Ms. Chen represents banks, credit funds, hedge funds, private equity funds, broker-dealers and other financial institutions in a wide range of financial transactions, including NAV and hybrid facilities, margin lending, hedge fund loans, syndicated financing, asset based lending, subscription facilities, and DIP financing. She regularly advises clients on complex issues regarding NAV facility structures, pledge of private equity interests, margin regulations, and Rule 144 matters. Ms. Chen also has years of experience handling complex tri-party account arrangements with major custodian banks in the U.S.

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Sherri Snelson
Partner
White & Case LLP

Ms. Snelson has extensive experience acting as lead counsel for lenders, private equity funds, and their portfolio companies in connection with leveraged finance and fund/portfolio finance transactions. She is dual qualified in New York and England & Wales and practiced previously in the UK. Ms. Snelson has acted as lead counsel on hundreds of finance transactions that span a wide array of industries and jurisdictions throughout the Americas, Europe and Asia. Hers experience also includes advising investors and borrowers in connection with both in- and out-of-court debt restructurings, DIP financings, exit financings, 363 sales, English administrations and schemes of arrangements, and insolvency related matters in several European jurisdictions.

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Adam D. Summers
Partner
Fried Frank Harris Shriver & Jacobson LLP

Mr. Summers advises investment banking clients, debt funds, and other lenders on credit and capital markets transactions. He has extensive experience through all phases of the deal process, from the early stages through closing and funding and also represents various corporate clients on a range of financing transactions. Banks and commercial lenders seek Mr. Summers’ advice in both syndicated credit facilities and high-yield bond financings related to leveraged buyouts and other acquisitions, and he provides ongoing counsel to agents and arrangers under those facilities. Mr. Summers’ practice also includes work on numerous subscription credit facilities, NAV loans and asset financings for private equity and debt funds. In addition, he represents fund managers and lenders in financings by fund managers relating to fee streams and other assets.

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Description

On July 25, 2024, ILPA issued guidance providing general parameters for improving transparency, governance, and risk management between limited partners (LPs) and general partners (GPs) around the use of NAV-based facilities as a liquidity and portfolio management tool. This guidance was in response to the increasing prevalence of NAV-based financing facilities in private equity where the facility is structured as an asset-based debt at the fund level.

ILPA broadly defines "NAV-based facilities" as any "credit facilities that are backed by the value of the fund's investments." While ILPA's guidance provides caution in the use of NAV-based facilities, the guidance generally does not oppose the use of NAV-based facilities, and it does not limit permissible use cases. It also does not impose leverage limitations tied to the use of NAV-based financing. Instead, ILPA's guidance is intended to establish a standardized framework to encourage further cooperation between GPs and LPs and ensure their interests are balanced with the objectives of the fund.

The ILPA guidelines address several key concerns of LPs regarding the use of NAV-based facilities including the lack of transparency, governance, and disclosure, inconsistent approaches to how GPs treat NAV-based facilities, and the use of proceeds and expenses relating to NAV facilities to fund early distributions. The guidelines address these concerns by promoting and improving transparency and encouraging LP engagement when a fund is considering NAV-based financing.

Listen as our authoritative panel discusses how ILPA's guidance addresses the key concerns for LPs in the deployment of NAV-based financing facilities and provides practice pointers for advising LPs, GPs, and lenders on implementing these recommendations going forward.

Outline

  1. Background: market conditions and the rise in NAV-based financing by private equity funds
  2. LP concerns regarding NAV-based financing facilities
  3. Summary of ILPA's recommendations regarding the use of NAV-based financing facilities
  4. Legal documentation recommendations
    1. GP treatment of NAV-based facilities in older LPAs
    2. Addressing NAV-based facilities in newer LPAs
  5. Practical considerations for market participants going forward

Benefits

The panel will address these and other key considerations:

  • What is the background regarding ILPA's release of its new NAV guidance?
  • What investor concerns of LPs relating to the use of NAV-based facilities do the guidelines address?
  • Do ILPA's new guidelines oppose or seek to limit the use of NAV-based facilities in private equity strategies?
  • What are ILPA's key recommendations regarding NAV-based facilities in private equity strategies?
  • What are practical considerations going forward for market participants contemplating the implementation of ILPA's recommendations?