Fund Finance and Backleverage

Willkie’s finance and structured finance teams have extensive experience representing asset managers and lenders in fund finance and back leverage products, including subscription or capital call borrowing, hybrid facilities, NAV facilities (including ABL, warehouse and forward-flow structures), preferred equity, management company facilities, and GP and principal programs. Our collaborative teams in the U.S. and Europe work seamlessly with our Chambers-ranked asset management, private funds, and insurance regulatory teams.

We have deep insight into the fundraising and liquidity trends affecting the leverage needs of asset managers across all investment strategies, including private equity, private credit, real estate, and secondaries. Willkie takes a holistic approach to developing fund finance trends, including the rise of private credit and private asset-backed finance, fundraising from retail investors, rated note feeders, collateralized fund obligations, the use of private letter ratings and NAIC developments, the growth of GP-led liquidity transactions, securitized capital call loans and credit risk transfers.

For subscription facilities, Willkie has experience with secured and unsecured facilities to investment vehicles inclusive of all investor types, such as retail distribution structures and sovereign wealth funds. We have structured capital call lines for separately managed accounts and fund-of-one structures. We understand the current trends impacting whether commitments from rated note vehicles are included in subscription facilities.

Willkie regularly advises on NAV facilities, from both banks and direct lenders, as well as on the various diversification and collateral structures of such NAV loans. Our NAV experience with private credit managers includes warehouse and forward flow arrangements across various loan asset classes, including middle market direct loans, consumer loans, and other asset-backed loan types. With respect to single-asset NAV facilities, such as those used in connection with fund liquidity transactions, to back lever a GP’s equity needs for particular portfolio companies, and continuation funds, we also have experience with private margin loans, which have similar underwriting considerations to single-asset NAVs.

Our team also has experience with preferred equity issuances in lieu of NAV financing and the related use cases and structures associated with such issuances.

For evergreen funds and certain registered fund vehicles (such as interval funds and BDCs), we are familiar with the liquidity and financial products available to support the liability management of these structures. In these structures, the finance teams are supported by Willkie’s asset management regulatory group, which is one of only three practices ranked in Band 1 for Investment Funds: Regulatory & Compliance by Chambers USA 2024.

With respect to fundraising from insurance company investors and accessing other capital efficient liquidity, Willkie has both formed rated note feeder funds and represented investors purchasing rated notes or investing in collateralized fund obligations (CFOs). Our insurance regulatory team follows and regularly publishes on NAIC and SVO developments, including the implementation of the principles-based bond definition and scrutiny of private letter credit ratings. We understand the reinsurance needs of insurer investors. We have experience collaborating with credit rating agencies to obtain private letter credit ratings as well as with various fund administrator and trustee industry participants. We also have extensive experience advising on so-called “self-CLO” structures to facilitate insurance company investment.