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
14 Apr 2021 |

Listing Securitization Vehicles on The International Stock Exchange

This article provides a summary of Appleby listing agent services in the Channel Islands, and also o...

Contributors: Chris Smedley
8 Apr 2021 |

Listing Real Estate Investment Trusts (REITs) on The International Stock Exchange

This article provides a summary of Appleby listing agent services in the Channel Islands, and also ...

Contributors: Chris Smedley
31 Mar 2021 |

Listing Asian backed issuers on The International Stock Exchange

This article provides a summary of Appleby listing agent services in the Channel Islands, and also o...

Contributors: Chris Smedley
25 Mar 2021 |

Fraud in the sub line market – should we be concerned?

In recent weeks, news of the JES Global Capital fraud committed by fund manager Elliot Smerling has ...

Contributors: Daniel Healy
25 Mar 2021 |

Full Steam Ahead at the Jersey Ships Registry

Against a backdrop of uncertainty surrounding Brexit and the difficulties created by the global pand...

23 Mar 2021 |

Listing SPACs on The International Stock Exchange

This article provides a summary of Appleby listing agent services in the Channel Islands, and also o...

Contributors: Chris Smedley
18 Mar 2021 |

Listing ESG and Green Bonds on The International Stock Exchange

This article provides a summary of Appleby listing agent services in the Channel Islands, and also ...

Contributors: Chris Smedley
12 Mar 2021 |

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...

11 Mar 2021 |

No Security over Beneficiary rights

The Royal Court recently considered, for the first time, whether it was possible to issue an arrêt ...

Contributors: Amy Benest
11 Mar 2021 |

LIBOR Transition - A Jersey Perspective

As we discussed in our previous article ‘No More LIBOR’, the interest rate benchmark LIBOR is ex...

Contributors: Andrew Weaver, Mark Brady