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
30 Jun 2020 |

"Lockdown" or "Time to Break Free"?

Arguably one of the greatest strengths of the human race is our ability to adapt. Few people in our ...

Contributors: Richard Field
24 Jun 2020 |

Continuance of unincorporated Foreign Limited Partnerships Into Jersey

Jersey has developed into one of the world’s leading financial centres, offering investors and pro...

Contributors: Chris Smedley
23 Jun 2020 |

The International Stock Exchange – The home of UK Real Estate Investment Trusts (REITs)?

Real Estate Investment Trusts (REITs) were introduced in the UK under the Finance Act 2006 on 1 Janu...

Contributors: Chris Smedley
19 Jun 2020 |

Warranty Claims: On time, but too late?

A recent decision in the English High Court highlighted the importance of buyers acting quickly if t...

18 Jun 2020 |

JFSC ‘turns up the heat’ on non-compliance

It cannot have gone unnoticed that the Jersey Financial Services Commission (JFSC) is taking an incr...

Contributors: Daniel Healy
11 Jun 2020 |

Jersey Companies and Public Offers: Impact of Covid-19 on Deal Execution

The first half of 2020 has proven to be very challenging for dealmakers globally to execute transact...

Contributors: Kevin McQuillan
4 Jun 2020 |

Commercial leases in Jersey - Practical considerations arising from new guidance for the Covid-19 period

Tenants of commercial premises in Jersey suffering financial hardship may be considering, or may ind...

3 Jun 2020 |

Appleby’s overview of the key benefits of listing high yield bonds on TISE

In the last few years, an increasing number of issuers of high yield bonds have chosen The Internati...

Contributors: Chris Smedley
2 Jun 2020 |

Corporate Insolvency and Governance Bill: A Jersey Perspective

Insolvency professionals have watched with great interest as the Corporate Insolvency and Governance...

Contributors: Gemma Whale