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Abstract: 

Fund financing facilities, including subscription facilities and NAV facilities, have become a ubiquitous financing tool for investment funds. Both subscription facilities and NAV facilities are forms of “asset-based lending.” In subscription facilities, funds borrow primarily against the uncalled capital commitments of the fund’s investors, and in NAV facilities, the collateral is the fund’s underlying fund investments. Today, as the fund finance market has become more sophisticated, investment funds are experimenting with bespoke facilities containing both subscription and NAV components. Additionally, fund finance is converging with bond and capital markets, as well as looking to obtain fund financing tied to environmental, social, and governance metrics.

Keywords: Asset-Based Lending; Subscription Facilities; NAV Facilities; ESG in Fund Finance Products

Affiliations:  1: Fried, Frank, Harris, Shriver & Jacobson LLP.