Cadwalader’s Mike Mascia connects with Jeff Johnston, Managing Director and Head of Subscription Finance at Wells Fargo and Chairman of the Fund Finance Association, in this week’s podcast edition of Fund Finance Friday: Industry Conversations. In the podcast, Jeff and Mike have a wide-ranging conversation, covering not only what Jeff is seeing in his portfolio and how the FFA is adjusting to the uncertainty, but also some of the challenges of leading large teams during stressful circumstances while in WFH, potential fund finance innovations coming out of the disruption and a deeply personal discussion of the passing of Jeff’s father-in-law in March.
Alice Murray of The Drawdown wrote an article earlier this week titled “Nothing to see here: LP defaults are fake news.” The article covers the Fund Finance Association’s response to the COVID-19 market disruption and reports on how well investor capital call funding has held up through the crisis to date. Cadwalader’s Mike Mascia is quoted throughout.
There has been a flurry of articles relevant to the fund finance community that were published this week and last. In a follow-up to an earlier article about two instances of European LPs defaulting on capital commitments, Private Equity International (PEI) issued a brief response aptly labeled “Investor liquidity: reading the runes."
The “denominator effect” tops the list of LP considerations in the current environment, according to an April 8 ILPA publication. The term is shorthand for the shifting portfolio allocation toward private equity that happens when the value of public equity holdings decline. IPLA summarized its anecdotal investor survey findings in a report titled “ILPA Insights: LP Perspectives on the Impact of COVID-19.”
Alex Bolton recently joined First Republic as a Managing Director, focusing on private equity finance. First Republic’s private equity finance offering includes capital call facilities, management company lending, GP finance, and a range of other banking solutions for private equity funds and their principals.
Our associate Danyeale Chung this week led a give-back effort from our team to healthcare workers in both New York and Charlotte where family members of our teammates are working on the front lines helping virus patients. The personal sacrifice these medical professionals are making is astounding. As a reward for meeting our fundraising target, Mike Mascia agreed to post this ridiculousness in this week’s FFF.
Here's a look at what we're reading outside the four corners of fund finance.
The Fund Finance Association this week hosted a call with representatives of its major event sponsors. Following the call, the FFA released a statement summarizing what its constituents are seeing in the market, addressing many of the narratives in recent press reports and providing suggestions for best practices for managing the challenges in the market.
Cadwalader’s Mike Mascia connects with Matt Posthuma, a Partner in Ropes & Gray’s fund formation group, in this week’s podcast edition of Fund Finance Friday: Industry Conversations. In the podcast, Matt gives an update on how the disruption is impacting fundraising in the real estate space, the state of real estate fund operations and capital call activity from his vantage point, and Investor performance on capital calls.
As part of the routine “know-your-customer” onboarding process, lenders are required to obtain the employer identification number (“EIN”) and other tax and beneficial ownership information from borrowers and guarantors to their credit facilities. Yet borrowers and guarantors formed in foreign jurisdictions, such as the Cayman Islands and Luxembourg, have recently had difficulty obtaining an EIN because the Internal Revenue Service has shuttered many of its offices in response to the COVID-19 outbreak.