Despite continued challenges in the fundraising market for sponsors of real estate, private equity and other investment funds (each, a “Fund”), the positive momentum capital call subscription credit facilities (each, a “Facility”) experienced in 2012 has continued and perhaps accelerated in early 2013. And for good reason: on all the panels at the Subscription Credit Facility and Fund Finance Symposium in January of 2013 in New York City, mention by panelists of institutional investor funding delinquencies could be counted on one hand.
This type of historical investor funding performance of course translated to near perfect Facility performance through and coming out of the financial crisis. Yet despite the excellent Facility performance and the measured growth of the Facility market generally, there is growing recognition that certain trends in the market are creating very real challenges. In this article, we set out our views on the Facility market’s key trends, where they intersect and the resulting challenges and opportunities we see on the horizon.