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Guiding Clients Through the Evolving Fund Finance Market

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Fundraising challenges, pricing shifts and macroeconomic uncertainty are some of the factors driving the recent evolution of fund finance, but they also create opportunities for enhancing client relationships, according to a panel of industry experts at the 7th Annual European Fund Finance Symposium. 

“Asset valuations are uncertain which pushes back exits and, as a knock-on effect, fundraising is more difficult,” said Alex Griffiths, Head of Structuring, Fund Finance, MUFG Investor Services. “Closing a financing is taking more time and work from the first connection to closing. But these uncertain times create opportunities to form meaningful partnerships with clients, support them through this part of the cycle and emerge stronger together.”

Griffiths hosted the discussion on the evolution of fund finance and future projections at the 19 June symposium in London. The panel of industry experts included Andy Roberts, Senior Director, RBS International; Sabih Hussain, Managing Director, Global Head of Fund Finance, Barings; Raghav Wadhawan, Executive Director, Standard Chartered Bank; Philippe Max, Partner, Dentons; Nicola Germano, Managing Director, Head of Fund Finance Financial Sponsor Group, Instesa Sanpaolo; and Olivier Vermeulen, Partner, Paul Hastings. 

In addition to fundraising and pricing challenges, the panelists said that changes to the lender market are impacting supply and funds also are facing a less “borrower friendly” market. While there is capacity in many sectors and institutions, managers must be attuned to how banks want to provide their clients with access to that financing. Fund financing capacity also is being affected by a range of factors, including lenders encountering issues with caps, internal cost of funds and decisions on allocating capital.

As firms approach the second half of 2023, Griffiths noted that sponsors are approaching banks earlier to increase certainty of funding. “We are seeing a big uptick in deals right now before summer to try and lock in terms for deals which will close in Q4,” he said.