Skip to content
Sub practice
Sub practice

Fund Finance

Allen & Overy’s global fund finance practice has extensive experience in advising banks, agents, alternative lenders and investment fund managers on a broad range of upstream and downstream facilities.

Our lawyers bring in-depth technical and commercial knowledge to a wide range of lending structures across the fund finance spectrum. Working alongside specialist lawyers in our real asset (including private equity, real estate, transportation and infrastructure), tax and regulatory teams, we offer an exceptional breadth of experience and as a result our clients benefit from our clear understanding of the current legal and commercial issues relevant to all parties in fund finance transactions.

A particular strength is our ability to offer specialists across our global fund finance practice and in the key areas of finance, fund establishment, tax and regulatory. These specialists frequently work together on financing transactions involving different types of assets across multiple jurisdictions. We regularly work on facilities with European (including UK and Luxembourg) and offshore (including Channel Islands and Cayman Islands) entities. We have a deep understanding of the issues relevant both for financiers and also for funds and their investors.

We advise clients on

Asset backed facilities (NAV based)

Asset backed facilities (NAV based)

A facility provided to a fund which is intended to have full recourse to the underlying investments (and the cash flows and distributions related to them) of the fund. A NAV facility will be backed by the assets of the relevant fund, which may be its equity or other partnership interests it owns (for example, for secondary funds or "fund-of-funds" borrowers) or its underlying loan portfolio (in the case of a direct lending fund). Lending to a direct lending fund may have many similarities with a CLO structure and we are familiar with the issues where such a facility is to be structured as a securitisation.
Capital call and subscription credit facilities

Capital call and subscription credit facilities

A type of bridge facility, usually short-term, entered into by the fund in order to assist in providing funding pending a close of the fund or in achieving investment objectives and to manage the timing and administration of investor drawdowns. The lender’s risk is on the creditworthiness of the fund investors and will generally include security over the uncalled investor commitments and related bank account security.
Fund due diligence for lenders

Fund due diligence for lenders

Our fund formation team regularly advise lenders, investors and fund managers in connection with reviews of fund documents. This can be as part of the usual diligence on a financing transaction or as part of a wider portfolio review exercise.
Hybrid facilities

Hybrid facilities

A facility which looks down at the underlying assets (as for an asset backed facility) as well as requiring there to be headroom in the undrawn commitments of investors.

These can be:

  • ‘true’ hybrid facilities, including full security and credit analysis on the investors, the funds assets and underlying cashflows; or
  • a variant on a capital call facility with an additional net asset value covenant inserted which will take effect once the ratio of undrawn investor commitments to financial indebtedness reaches a particular level.
Umbrella facilities

Umbrella facilities

A facility whereby a lender provides separate loans to multiple borrowers under one facility agreement thereby allowing the parties to agree just one set of documents for numerous facilities. Likely to be of use for individual borrowers who are under common management and/or are part of a wider fund structure. Many of the terms of the facility will be common to all borrowers but investor specific terms (such as advance rates, concentration limits and loan amounts) can be different. Each borrower will usually be severally liable for its own borrowings under these facilities.

Explore our services

Download Financing the Economy 2020

Modern city skyline illuminated at night

Read the new research produced by the Alternative Credit Council in partnership with A&O.

 

Download PDF

News & insights

Risk Free Rate and LIBOR Cessation – What does this mean for fund finance?

Publications: 27 OCTOBER 2020

Risk Free Rate and LIBOR cessation – what does this mean for fund finance?

Our previous note entitled ‘Great Expectations – IBOR Transition for Funds and Asset Managers’ discussed the potential impact of IBOR transition on asset managers. 

Read more
ESG Taxonomy: What fund and asset managers need to know

Publications: 14 SEPTEMBER 2020

ESG Taxonomy: What fund and asset managers need to know

A key plank in the European Commission’s work programme to help it move to a carbon neutral, sustainable EU involves the Taxonomy Regulation. This is a framework which allows for the progressive…

Read more
Exterior of a modern high rise building

Publications: 11 AUGUST 2020

Cross-Border Distribution of Collective Investment Funds

The regulatory landscape for marketing funds in Europe is complex due to the divergent approaches taken by the various Member States in implementing fund distribution and marketing rules. 

Read more

Publications: 24 JULY 2020

Podcast: Face to Face with Andri Wardhani: Women in Tech (Part 2)

Listen to the second part of our first episode in our Jakarta Women’s Network series. We continue our discussion with Andri Wardhani, associate at Golden Gate Ventures, a venture capital firm…

Read more
View more

Related expertise

Cookies on our website

We use cookies on our site to remember you, show you content we think you will like and help you to use the site. For more details, please see our cookies policy.

Click 'Accept' to consent to cookies other than strictly necessary cookies or 'Reject' if you do not. You can change your mind at any time by visiting our cookie policy page.

Accept cookies
Reject cookies