Management Fee Credit Facilities
Mayer Brown Article
As the subscription credit facility market matures, lenders seeking a competitive advantage are expanding their product offerings to private equity funds (a “Fund”) from traditional capital call facilities made to closed-end Funds to other financing products, including lines of credit to open-ended Funds, separate-account vehicles and net asset value facilities. Another emerging product gaining traction in the market with some Fund sponsors (a “Sponsor”) is a so-called management fee credit facility (a “Facility”). A Facility is a loan made by a bank or other financial institution to the general partner of the Fund or a Sponsor-affiliated management company or investment advisor of a Fund, and has a collateral package that is distinct from other types of security arrangements commonly associated with Fund Financings.