Miami 2024 Fund Finance Conference Offers Expert Perspectives and Strategies

The Miami 2024 Fund Finance Conference is a must-attend event for industry professionals. The conference will offer expert perspectives and strategies on the latest fund finance trends and developments.

Attendees can expect to learn from top industry experts and network with peers from around the world. The conference will provide a platform for knowledge sharing and collaboration.

The conference will cover topics such as fund finance structures, regulatory updates, and market trends. These topics are crucial for fund managers and investors to stay ahead of the curve.

By attending the conference, professionals can gain valuable insights and practical advice to improve their fund finance strategies.

The fund finance market is showing great resilience, despite the regional banking crisis that impacted pricing in the last 12 months. The market is now a little more competitive, with 25% of it disappearing overnight, but most of it came back quickly through consolidation and employee movements.

The industry has evolved significantly in the last 10 years, moving from mere subscription line facilities to private credit, CLO tranche investing, NAVs, and hybrids. This evolution has been driven by various macro-economic developments, such as the challenging interest rate environment and the large influx of capital into insurers and pension plans.

In 2023, ESG was a hot topic, but the chatter has quietened down a little due to backlash in the US. Despite this, demand for ESG data continues to be high, with 80% of EU GPs viewing ESG and sustainability-linked loans as having a positive impact on fund returns.

The secondary fund market had a record year in 2023, with more than $100 billion in deals and the market reaching more than $500 billion. This growth has been driven by the increasing use of continuation funds as a portfolio management tool to free up liquidity.

Here are some key statistics on the secondary fund market:

The high-rate environment has led to a decrease in buyouts, but there has been no downturn in deal volume, and demand remains high, especially for large transactions. This is largely due to buyers sharpening their underwriting and more participation from non-bank lenders.

The fund finance landscape is evolving rapidly, and it's essential to stay informed about the latest trends and best practices. A key takeaway from the panel discussion on subscription finance is that banks are now proactively engaging with borrowers at an early stage to ensure open communication on borrowing requirements throughout the lifecycle of the fund.

In a challenging fundraising market, selecting the right lender and loan size is crucial. Borrowers should borrow for the reality they need, rather than the maximum loan available based on investor commitments. This approach can help avoid unnecessary undrawn commitment fees.

Investors are increasingly accepting of NAV facilities that are utilised by the fund to fulfill the same cash flow management requirements as subscription facilities. However, there are concerns when the NAV line is used for increasing fund leverage or paying distributions to LPs rather than smoothing down capital call frequency.

The use of ratings for subscription facilities is a topic of discussion, with a current one-size-fits-all approach being debated. Ratings can add colour and help with syndication, but they should not be deal critical and should not replace credit analysis.

The credit space has merged significantly, with growth and investor allocation to private credit as a diversifier and income source. Investors are focusing on achieving up to a 10% return target across the entire credit spectrum, including structured credit and private credit.

Bullish sentiment towards real estate private credit exists, driven by banks pulling back on direct property lending. Alternative lenders are filling the gap, creating opportunities for investors to generate long-term equity returns with less risk and volatility.

Investors should consider the following factors when evaluating subscription facilities:

At the Fund Finance Conference Miami 2024, you'll have the chance to learn from the best in the industry. Treasury leaders from over 50 companies will be sharing their latest tools and strategies for driving positive business outcomes.

You'll get to understand how US foreign policy, trade, and tariffs are shaping US business decision-making. This knowledge will help you make informed decisions for your own business.

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Some of the key sessions to look out for include:

By attending these sessions, you'll be able to share expertise, get deeper insights, and brainstorm solutions with peers facing similar challenges.

The keynote session was a highlight of the event, featuring a 40-minute discussion with the CFO of Blackstone. He covered a range of topics.

The broader macro-economic outlook was one of the key areas of discussion, and it's clear that Blackstone's leadership is keeping a close eye on the global economic trends. They're also paying attention to the rise of private credit, which is a significant shift in the financial landscape.

The CFO took the audience on a tour of the Blackstone business, highlighting what makes it one of the largest and most durable companies in the world. People, culture, and reputation are critical assets that Blackstone zealously protects.

Attending the event will give you the opportunity to understand how US foreign policy, trade, and tariffs are shaping US business decision-making.

You'll get to learn from 50+ treasury leaders who will share the latest tools and strategies for driving positive business outcomes.

Networking opportunities are plentiful, with attendees raving about the chance to meet with peers facing similar challenges and share expertise.

Debate regional challenges with experts, including tax and compliance, trade and SCF, and commodities hedging.

Some notable attendees include multinationals and industry leaders who will be happy to connect with you.

Here are just a few of the benefits you can expect from attending:

Risk Management is a top priority for fund managers, and for good reason. Higher interest rates and a rising USD have created significant challenges, driving up demand for foreign exchange and interest rate hedging.

Fund managers are now more actively engaging with banks, seeking out interest hedging, direct lending swaps, and other solutions to mitigate risk. This increased activity has led to longer deal-closing times, making it essential for managers to be proactive in their risk management strategies.

To effectively manage risk, fund managers must consider the impact of Basel III and potential increases in regulatory capital needs. By staying informed and adapting to these changes, managers can make more informed decisions and navigate the complex landscape of fund finance.

Curious to learn more? Check out: Risk Financing

The Regional Banking Crisis taught us some valuable lessons in risk management. Communication was key in maintaining relationships with general partners and understanding their liquidity needs.

Relationships are crucial in times of crisis, and the crisis highlighted the importance of having a good relationship with your personnel. This relationship was vital in finding a way through the uncertainty and gathering information.

Uncertainty around payment mechanics was a major concern during the crisis, but it's reassuring to know that every borrowing request was honoured in full.

The crisis may lead to a shift in the market towards a diversity of lenders and financing providers. This could involve opening accounts across many institutions.

The subscription lines were a safe product during the crisis, thanks to the support of credit committees. This stability helped the market to not overreact to the event.

The well-established relationships in the industry enabled it to stabilise and recover from the crisis. This shows the importance of building strong relationships in risk management.

FX & Interest Rate Risk is a crucial aspect of risk management for fund managers. The panel discussion highlighted the significant impact of higher interest rates and a rising USD on foreign exchange and interest rate hedging.

Fund managers are increasingly turning to hedging strategies to mitigate their exposure to interest rate risk. This is driven by factors such as private credit growth and rate changes.

Basel III regulations have also had a major impact on fund managers, increasing their regulatory capital needs and forcing them to rethink their approach to interest rate risk management.

The length of time it takes to close deals has increased, with fund managers now taking a more considered approach to direct lending swaps.

The lending and credit space is undergoing significant changes, with new players and products emerging. The rise of non-bank lenders is a notable trend, with opportunities for collaboration with banks and the potential to add value for sponsors.

One key differentiator between private equity and private credit is the pressure to refresh the portfolio, which can lead to different dynamics for the fund and lender. This can result in different drivers within the documentation.

Investors in credit funds expect to incur leverage as part of their investment strategy, making them more willing to accept NAV financings alongside other types of debt. This is in contrast to private equity investors, who may not expect their investor to be encumbered at that level.

The private credit market has grown significantly since the global financial crisis, driven by the increase in lenders and the large amount of capital looking to be allocated. Currently, there are 200,000 middle market companies, with only 10% using alternative financing, providing a significant opportunity for growth.

Here are some key statistics on the private credit market:

The use of NAV financings in private credit is becoming more prevalent, with managers now utilising this product as and when it suits their fund's needs. This is expected to continue, with more NAV financings being used in the private credit space.