The funded status improved meaningfully for pension funds in April. The Milliman 100 Public Pension Funding Index, which tracks the 100 largest government-sponsored defined benefit pension plans, showed an investment return of 5.92% for the month, reducing the group’s estimated deficit by $200 billion to end the month at $1.619 trillion. The funding ratio for index constituents improved to 69.8% from 66.0% at the end of March. The group controlled total assets of $3.750 trillion at the end of April.
The true slowdown in fundraising is likely to become more evident in Q2, and reduced capital from LPs is expected to lead to a competition for new commitments and deal terms that shift to favor LPs, according to observations in the recently published Wilshire Private Markets Update.
Uncertainty around asset values and settling on a valuation process are key challenges for lenders looking to provide NAV loans in the current environment, according to comments from Debevoise & Plimpton LLP partner Ramya Tiller summarized in Private Funds CFO.
Dee Dee Sklar, former vice-chair of subscription finance at Wells Fargo, is now a senior advisor for the London-based firm 17Capital.
Private Equity Wire published an article this week titled “New research highlights how fund finance will help GPs combat impact of Covid-19.” The article focuses on a survey completed by Intertrust, discussed at a recent webinar for industry professionals, that looked at how GPs will make use of the tools and options provided by the fund finance market to address liquidity management.
A tip of the cap to our colleagues in the firm’s Financial Services Group, which was named the 2020 International Financial Law Review (IFLR) Americas Financial Services Regulatory Team of the Year.
With markets in uncharted waters, Jeremy Cross from Cadwalader and Jamie Mehmood and Ben James from the Fund Finance Advisory team at Deloitte have gathered together their collective experiences over the last few weeks to provide an overview of the main headwinds in the UK and European Fund Finance market during the current COVID-19 pandemic. Here they examine some of the key themes from both a manager and lender’s perspective, as well as share some thoughts on the future direction of the market.
Dave Philipp of Crestline Investors and Scott Aleali of First Republic Bank connect with Cadwalader’s Mike Mascia in this week’s podcast edition of Fund Finance Friday: Industry Conversations. In the podcast, Dave covers the breadth of the NAV-lending market, including detail about transaction structures and attachment points, addressing revised marks in an existing portfolio, the uptick in borrower inquiries post-COVID, and forecasts for how the NAV and pref equity markets may expand and evolve in the medium and longer-term. Scott gives a credit performance update on the capital call space, discusses the evolving uses of capital call lending in the new environment, and provides a host of insightful predictions for how both the fund finance market and the macro landscapes are likely to play through during the summer and into the future.
Credit agreements often allow private equity funds to join their portfolio companies to fund finance facilities as “qualified borrowers.” In the past, many sponsors did not take advantage of this option, but there has been a marked increase in qualified borrower joinders in recent months. The following is a general overview of the treatment of qualified borrowers in traditional subscription credit facilities (it does not, however, deal with NAV and hybrid facilities, which provide for the pledge of a fund’s underlying assets).
Samantha Hutchinson features in The Lawyer this week, providing some interesting insights and tips for those looking to pursue a career in fund finance.