Trends in the Use of Subscription Credit Facilities: Advantages for PE Investors and Sponsors Have Led to Adoption by Some Hedge Funds and Credit Funds (Part One of Two)

A recent webinar presented by the Hedge Fund Law Report examined key considerations and prevailing trends in the use of subscription credit facilities by private fund managers. The program was moderated by Rorie A. Norton, Editor at the Hedge Fund Law Report, and featured Thomas Draper, partner at Foley Hoag, and Michael C. Mascia, partner at Cadwalader. This article, the first in a two-part series, covers the portions of the program that addressed the logistical and economic benefits fueling the rise in popularity of subscription credit facilities; investor concerns about the facility and how the market has responded; and recent efforts by other types of private funds to adopt the facility. The second article will highlight considerations when structuring the facility and negotiating with lenders, as well as important provisions to address in fund partnership agreements and side letters to facilitate a fund’s adoption of a facility. For additional commentary from Draper, see “New Foley Hoag Partner Discusses Trends in the Use of Capital Call Facilities Across the Private Funds Industry” (Nov. 1, 2018).

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