Key takeaways from the Fund Finance Association 2024 Global Leadership Summit

The Pine Cliffs Resort hosted the FFA’s 2024 Global Leadership Summit this week where key players and leaders from across the industry gathered to discuss macroeconomic, geopolitical, policy, legal, regulatory and other matters affecting the fund finance market and related capital markets.

Once again, a DLA Piper team composed of Xavier Guzman (country managing partner for Luxembourg), Charlotte Lewis-Williams (Finance partner in London) and Yann Zellet (Finance counsel in Luxembourg) attended the summit and have summarised their key takeaways from the conference working group sessions and panels.

• Access to liquidity remains a key focus for funds, and lenders are keen to highlight that there is no shortage of liquidity for subscription lines, although NAV lending activities may vary across the spectrum of bank and non-bank lenders. The recycling of capital may be slower in the prevailing macroeconomic environment but, with new entrants to the market including credit funds and insurance backed investors, activity levels in all fund finance sectors are expected to increase in the next 12 months.


• Attendees consider that the biggest impact on the fund finance market in the next 12 months will come from global M&A activity, fund raising (which is expected to pick up in 2025), GP and LP sentiment on NAVs and the evolution of the interest rates.


• The vast majority of players consider that the rise in the use of secondaries and continuation funds is a trend that is set to continue, partly as a function of the current fundraising environment. There are a number of diverse and innovative options available to funds with capital competing across the debt and equity structure including preferred equity solutions as well as NAV and CVs.


• The regulatory climate continues to draw distinctions between the US and European markets, with Basel III endgame and bank capital requirements at the forefront of minds as well as NAIC requirements for insurance backed lenders. This arbitrage will impact bank and non-bank lenders differently, contributing to the variety of fund finance strategies and debt offerings across the geographic markets and diverse types of lenders.


• Fund structuring needs are evolving in the changing macroeconomic landscape. New developments range from evergreen strategies including more open-ended funds or a series of close-ended funds (similar to BDCs) to non-discretionary models and SMAs, in particular for UHNWI. Retailisation is (re)shaping the market, especially in the US, and LPs expect more skin in the game from GPs. Bespoke structures can be facilitated by warehousing, NAV, back-leverage and ratings (public or private) and other tailored solutions can be found through hedging, securitisation, ABS and structured products. 


• Finally, several discussions among participants related to the role played by PE NAV products in the market, which is expected to grow in the coming months, especially considering the pressure on funds to generate liquidity.

The overall outlook for fund financing products is realistic and positive, driven by the commercial need for liquidity together with sustained and diverse lender appetite. Technological developments (including aggregators at incubation stage) are expected to further enhance the growth of the sector over the coming year.