USA Trends and Developments Contributed by: Yana M. Mereminsky, Ramya S. Tiller, Erik J. Andrén and Vadim Avdeychik, Debevoise & Plimpton LLP
the utilisation of NAVs have been observed, including a number of investors requesting LPAC approval of NAVs that will be used to fund distributions to inves - tors. The strong demand for novel fund finance solutions combined with the continued expansion of the fund finance lender base is driving unprecedented inno - vation in the fund finance market. There has been a resurgence of hybrid-type facilities for mid life cycle funds or to support higher LTVs in NAV financings. Traditional bank lenders are actively pursuing secu - ritisation structures and other risk transfer strategies to relieve balance sheet constraints. Rated feeders, CFOs and similar products targeting insurance com - pany capital have been resurgent given the general rate environment and the greater clarity in the regula - tory landscape. These products have become popular as a fundraising tool not only for credit funds but also for secondaries funds. Increasing use of these CFO structures as a liquidity tool in the current market is expected. It is indeed an exciting time in the fund finance market. The positive developments and trends of recent years continued in earnest through the first half of 2025 and The secondaries market has continued its year-on- year growth, driven by low DPI, subdued capital markets activity and increased liquidity demands. According to Evercore, last year saw USD160 billion in secondaries transactions (a 40% increase from 2023), with GP-led deals accounting for USD71 billion of that figure (up from USD51 billion in 2023). Although the GP-led market remains dominated by buyout strat- egies, asset managers have increasingly embraced continuation vehicles as a liquidity solution in other asset classes, including private credit. Credit continuation vehicles The last 12 months has seen significant growth in credit CV activity, with the closing of several significant transactions, including Abry’s USD1.6 billion credit CV led by Coller Capital, Antares’ USD1.2 billion credit CV led by Ares and Vista’s USD460 million credit CV led by Pantheon. Sellers have embraced the CV as a show no signs of relenting. Private Fund Transactions
means of returning capital more quickly to fund inves - tors relative to selling individual loans or having loans go into runoff. Several trends have emerged. • Pricing – Loan portfolios concentrated in senior credit are consistently priced with mid- to low-sin - gle-digit discounts. With the growth in the number of asset managers raising dedicated private credit platforms and of new entrants (including retail evergreen funds and LPs interested in co-investing in credit CVs), the bid-ask spread has narrowed. Recent competitive processes have seen bidding with no discount or a slight premium to gross asset value. As the period between the reference date and the closing date can extend upwards of six months, buyers can benefit from a pricing differ - ence due to a purchase-price reduction for interest payments during the pre-closing period. • Deferred consideration – Over the last year, there has been a dramatic uptick in the use of deferred consideration to bridge pricing gaps. In credit CVs, where there is pressure from sellers to maintain the par headline price, investors may be willing to pay a higher percentage of the gross asset value of the loan portfolio if there is deferred consideration or leverage on a portfolio. Some investors have negotiated for a deferral of 50% or more of the purchase price, with the up-front purchase price funded with a NAV facility. • Leverage – As private credit typically has a lower return profile than private equity, using leverage to boost returns is often part of the economics of a credit CV. NAV facilities have been deployed to fund part of the purchase price, as well as partner - ship expenses and follow-on investments. • Purchase price adjustments – With recent macro- economic volatility, buyers have increased their focus on closing conditions and, in some instanc - es, have pushed for downward purchase-price adjustments due to a material decline in the value of the portfolio – a departure from the market standard of locking the purchase price as of an agreed reference date and only adjusting for pre- closing cash inflows and outflows. This approach may be more palatable in the credit CV context given the more readily available objective meas - ures of performance (eg, credit ratings and con - tractual defaults). A price adjustment mechanism
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