Fund Finance Market Review

Looking forward in 2019, we are optimistic that the market for fund financing remains robust. In 2018, Mayer Brown noted a significant uptick in the number of traditional subscription credit facility (each, a “Subscription Facility”) closings and a record number of alternative fund financings such as net asset value facilities, hybrid facilities, secondaries transactions, management fee facilities and partner loans (together with Subscription Facilities, “Facilities”). Counterintuitively, this occurred even though fundraising in 2018 did not exceed the prior year’s numbers and in light of the recently publicized events relating to the insolvency proceedings of a Cayman Island domiciled fund that was sponsored by a Middle Eastern sponsor. In general, given investor (“Investor”) expectations for continued investment and the reaction of both private equity and other investment funds (each, a “Fund”) and lenders, we continue our optimism for 2019 with respect to both the Facility market and that of the Fund asset class. Below, we expand our views on the state of the fund finance market as well as current trends likely to be relevant in 2019.