Insights

Banks remain a provider of choice for fund finance

Recently, MUFG Investor Services teamed up with Private Funds CFO to survey managing partners, CFO, COOs and CIOs to assess the impact of COVID-19 on the private funds industry and identify trends.

Part of the survey concerned fund financing and here are some of the key takeaways. Banks remain the main provider of fund finance for GPs with a huge 84% of the count compared to just 11% which stated they use private debt funds. When asked what kinds of fund finance they use, 85% of firms said they use capital call facilities, only 32% use asset-backed finance for deals, and just 8% use asset-backed finance for recaps. Expectedly, 40% of firms expect their fund finance to increase over the next two years compared to just 5% which expect it to decrease, the rest expecting it to remain unchanged.

When interviewed by Private Funds CFO, Joseph Latini, Global Head of Business Development at MUFG Investor Services, confirmed the results saying, “The use of fund finance continues to grow across all strategies and jurisdictions. Subscription lines and capital call facilities are a huge part of the discussions we have with clients. Additionally, we are also seeing that closed-end funds are becoming larger and larger. As a result, the facilities being sought are often getting so large that they require syndication across several banks.”

As part of the 5th largest bank in the world with over USD3.2 trillion in assets and, with a significant balance sheet specifically allocated to fund financing, MUFG Investor Services is poised to meet current trends and expected demand. With fund finance offices in New York, London, the Cayman Islands, and Tokyo, we provide a wide variety of financing solutions including Fund of Fund bridge facilities, subscription lines of credit and FX products and services with significant flexibility, competitive pricing, and a range of other benefits.

For more information, or to receive a copy of the survey results, email contact@mfsadmin.com.