Fund Finance
At Turning Point, we specialise in fund finance, offering tailored solutions to meet the unique needs of private equity, real estate, and other alternative investment funds.
The Rise of the Private Market
Flexibility in Private Markets Amid Headwinds
While private markets continue to outperform public ones, recent challenges have forced GPs to adapt—both in portfolio management and financing.
Secondaries, particularly GP-led transactions, have gained traction, much like during the 2008 crisis. Demand for continuation vehicles has also risen.
Fund financing and hybrid facilities have surged, helping GPs extend fund lifespans, finance add-ons, and secure liquidity in today’s high-interest environment.
Key Challenges Facing Fund Finance Lenders
Data Consistency & Analysis
- Reliance on borrower or agent bank data in inconsistent formats (e.g., disparate spreadsheets).
- Difficulty aggregating and analyzing data accurately and at scale.
Risk Assessment Challenges
- Limited ability to assess exposure across multiple subscription lines or parent entities, risking collateral mismanagement.
- Lack of visibility into aggregated risk across GP counterparties and facilities.
Operational Inefficiencies
- Complex borrowing base calculations are difficult to verify without clean, accurate data.
- Limited tools for evaluating borrowing availability for specific transactions.
- Insufficient tracking of historical trends in collateral or borrowing base data.
Real-Time Monitoring Needs
- Urgent need for real-time data standardization and monitoring to adapt to changing collateral quality.
- Critical for meeting ongoing reporting requirements and maintaining proper risk guardrails.
Lender Appetite
Subscription Lines
Private equity remains the most preferred asset class for lenders across subscription lines, NAV facilities, and GP facilities. Its ability to attract high-quality institutional investors makes it particularly appealing, and historically, private equity has been the most active and innovative user of fund finance.
Key Insights from Our Latest Data:
- 97% of tracked lenders prefer private equity for subscription lines.
- 95% show interest in secondaries.
- 87% – 93% participate in fund of funds, infrastructure, growth, and credit strategies.
- 73% offer loans for real estate, making it one of the least favored asset classes.
The lower appetite for real estate financing may reflect recent sector challenges, including post-pandemic shifts such as the decline in office attendance.
Amid these circumstances, banks have been scaling back their involvement in this strategy. Since banks typically already have exposure to real estate at the asset level, they are becoming more selective at the fund level. Venture capital remains the least preferred asset class, with only 66% of the platform’s lenders offering subscription lines for this strategy, according to our data
NAV Facilities
Lender preferences for NAV facilities closely mirror those for subscription lines. Private equity remains the top choice, followed by secondaries, which attract lenders due to their diversified portfolios.
- 75%+ of lenders provide NAV facilities for fund-of-funds, infrastructure, growth, and credit funds.
- 50% offer facilities for real estate, making it one of the least favored asset classes.
Real estate’s lower appeal is likely due to the same challenges seen in subscription lines.
GP Facilities
Lender preferences for GP facilities align with subscription lines and NAV facilities.
- Private equity leads with 98% of lenders offering GP facilities.
- Growth capital (96%) and secondaries (93%) follow closely.
- Fund-of-funds, infrastructure, and private credit attract 81-93% of lenders.
- Real estate (70%) and venture capital (65%) are the least favored, with VC facing lower interest due to its specialized nature.
Private equity is the most favored asset class among lenders across all three fund finance products: subscription lines, NAV facilities, and GP facilities.
Lender preferences tend to align consistently across all three types of fund finance products. The only notable exception is with GP facilities, where growth capital emerges as a strong contender, coming in a very close second to private equity.
Size of loan vs. supply
Subscription Lines
Most lenders offer loans between £50m-£150m, with the highest concentration in the £60m-£80m range. 45% provide loans between £40m-£60m.
NAV Facilities
Follows a similar trend, with most lenders focusing on £50m-£150m, though many still provide loans under £50m.
GP Facilities
The strongest lender appetite is for £50m-£75m loans. 25% of lenders offer smaller GP facilities between £1m-£10m, as demand has risen amid tougher fundraising conditions.
Where is the sweet spot?
Largest proportion of mid market lenders for all three fund finance products. Appetite for GP facilities is slightly less than Subscription Lines and NAV facilities, at the 50-75m ticket range, there is 25% less lenders active in the market.
Request a consultation.
Whether its assisting with access to lenders, structuring a facility, or taking away all the heavy lifting, we’re here to help. To find out more about our fund finance solutions please use our contact form or email us at contactus@tp.finance.
