All this notwithstanding, the anecdotal message remains the same, albeit with a few small adjustments:

  • Early in the pandemic there was a spike as pipeline deals were brought forward to ensure pricing could be fixed at pre-pandemic levels.
  • The previously reported trends on the increasing popularity of NAV and hybrid facilities have continued. Concentrated NAV facilities (where debt is made available by reference to a smaller and more concentrated portfolio of assets than has historically been acceptable) have been particularly popular, even with larger managers. Many managers are also recognising the benefits of hybrid facilities as they can increase liquidity without risking the potential immediate loss of the portfolio on an LTV breach.
  • The use of preferred equity arrangements is also on the rise, but they remain an expensive option.
  • The subscription line market remains active. Initial fears of investors defaulting on capital calls and lenders left exposed seems for the most part unfounded. We have come across very few investor defaults, a view echoed by the FFA’s highest level sponsors.  For those with subscription lines already in place, there is little evidence that there has been a notable increase in capital calls or cash hoarding. Contrarian views seem more popular with managers not wishing to call capital for what is (hopefully) a short term issue.
  • As well as new deals there has been a marked increase in work on existing facilities as they are amended, extended and increased as funds restructure their affairs to address the challenges posed by the global pandemic. In particular, many funds have sought to accede portfolio companies as additional or replacement borrowers to assist with liquidity.
  • There is no escaping the practical impact the pandemic has had on everyone’s daily routine. New deals are taking longer to process which, combined with greater scrutiny from lenders who are also spending more time spent servicing existing clients, is pushing out timescales.
  • It is not just funds that are looking for increased liquidity. Managers, general partners and advisers are also looking to put in place liquidity and co-invest facilities.
  • At the time of writing there are indications that enforcement options are being explored but there appears to be little appetite, at this stage, to aggressively pursue these strategies.

After the initial rush, it does seem the curve is flattening as deals are now taking a bit longer to close but with demand still high the market outlook is positive and we, like many others, are looking forward to a very busy year.

If you would like to discuss the options that may be available to you, please reach out to Paul Worsnop, James Gaudin or one of the other members of the Appleby Jersey team.

Share
Twitter LinkedIn Email Save as PDF
More Publications
3 Dec 2020 |

Objectively speaking – Jersey confirms its stance on contractual formation

A recent decision of the Royal Court has held that, when determining whether or not parties have con...

1 Dec 2020 |

Reflections from the Virtual Fund Finance Symposium

The Fund Finance Association’s Virtual Symposium took place from 16th to 20th November. Attendees ...

27 Nov 2020 |

NAV Facilities: A Promising Vaccine for Funds in the Era of Covid-19?

The spotlight has been on NAV facilities and other bespoke financings as an area poised for growth, ...

23 Nov 2020 |

Foundations and the impact of the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020

Jersey adopted the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 (D...

23 Nov 2020 |

Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020

Jersey adopted the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 (D...

13 Nov 2020 |

To Intervene or not Intervene?

Consideration is often given as to the circumstances when the courts may intervene in the administra...

10 Nov 2020 |

Lockdown 2.0: Update on Jersey Cash Box Structures

Since our last update on cash box structures at the start of April 2020 the UK economy has endured a...

Contributors: Kevin McQuillan
30 Oct 2020 |

When Worlds Collide – How COVID is Connecting Technology with Natural Resources

Dating back to the beginning of 2020, the natural resources sector has been extremely active at both...

8 Oct 2020 |

Jersey makes final preparations for the Introduction of LLCs

The Limited Liability Companies (Jersey) Law 2018 (the LLC Law), allowing the registration of limite...

Contributors: Chris Smedley