2025年10月07日

Spectrum of Fund Finance Structures

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As the fund finance market matures, lenders are offering an increasingly sophisticated suite of financing tools—each tailored to specific entities and layers within the fund organizational structure. A market that has historically centered on subscription credit lines has evolved into a complex financing ecosystem that includes management company facilities, general partner (GP) and employee co-investment loans, investor-level leverage, NAV-based facilities, hybrid lines, margin loans, securitizations, and preferred equity. These solutions are often structured to meet bespoke liquidity objectives, enhance tax efficiency, optimize capital deployment, or accommodate jurisdictional and regulatory constraints.

This primer provides a practical, product-by-product overview of the key debt structures available to fund sponsors throughout their fund structures. For each financing type, we summarize the typical borrower, collateral package, purpose, and core legal structure. In doing so, we aim to demystify the relationships between these products and offer insights into how sponsors can strategically layer and sequence them as their funds scale, mature, and evolve.

Lenders play a crucial role in helping fund sponsors evaluate and implement these financing solutions in ways that balance operational flexibility with risk management. By understanding the use cases, intercreditor dynamics, diligence requirements, and legal pitfalls associated with each financing tool, market participants can more effectively structure facilities that align with their investment strategies and portfolio objective.

Conclusion

The fund finance market offers a broad spectrum of debt solutions, each tailored to the specific needs of fund sponsors, portfolio structures, and investor objectives. From management company lines to REIT and preferred equity financings, each structure presents distinct opportunities and risks. Navigating these tools effectively requires a deep understanding of their legal, tax, and commercial implications. With the right structuring and counsel, fund borrowers can unlock strategic liquidity, and lenders can deploy capital into increasingly sophisticated and scalable platforms.

Contributions have been provided by Todd Bundrant, Mark Dempsey, Jennifer Hartnett, Jonathan Dhanawade, Michael Gaffney, and Eric Reilly.

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