NETHERLANDS Law and Practice Contributed by: Folko de Vries, Ilse van Gasteren, Robert Smits and Stern Flik, Clifford Chance
lending strategies. Whether more private credit providers will consider founder-owned compa - nies or financing them from leveraged lending strategies will in part depend on the pressure to deploy capital. 1.7 Recurring Revenue Deals and Late- Stage Lending Recurring revenue-based financing is provided by private credit providers in the Netherlands, It is difficult to point to a typical size limit for private credit transactions in the Netherlands as there are not many deals in the market which will test this limit, given the number of private credit providers which can take very large tickets. The ability to take a large ticket will of course also depend on the fund’s available capital and/or the status of new fundraising. These limits and any challenges in new fundraising are, however, not Dutch specific as the vast majority of pri - vate credit providers active in the Netherlands are international funds. 1.9 Impending Regulation and Reform Dutch Regulators and Private Credit typically in relatively small deals. 1.8 Deal Sizes, Fund Sizes and Fundraising The Dutch regulators (the Dutch Central Bank and the Authority for the Financial Markets) are not specifically focused on regulating private credit lenders. They are awaiting the implemen - tation of the European Directives AIFMD2 and CRDVI, but are not developing any initiatives in
rules are general in nature and apply to business operations and dealings with investors generally. AIFMD also contains rules which are specific to investment techniques (such as leverage) and which are specific to certain asset classes (such as private equity) but are silent on loan origina - tion. AIFMD has, however, been amended (to include loan origination among other matters) but is yet to be implemented across the Euro - pean Union. It is referred to as AIFMD2 in its amended form. AIFMD2 introduces a range of rules on loan orig - ination. These include subject matters such as: • implementing policies, procedures and pro - cesses for the granting of loans; • implementing policies, procedures and pro - cesses for assessing credit risk; • loan concentration of 20% of the fund’s capital (called and uncalled contributions) to a single borrower of a certain type; • leverage restrictions (175% for open-ended funds and 300% for closed-ended funds); and • prohibition to grant loans to the fund manager (or its staff) or to its delegates, to the fund’s depositary (or its delegates), or to group companies. AIFMD2 is not going to impose any specific licensing requirements for fund managers which are already authorised. They may need to apply for a variation of permissions but will otherwise only need to ensure compliance with the new rules. These new rules are in relation to the business operations of the fund. They will not give the fund any regulatory permissions to grant loans to specific types of borrowers. That is a different matter and AIFMD2 is therefore without preju -
parallel. AIFMD2
The current European Directive on Alternative Investment Fund Managers (AIFMD) requires fund managers to comply with a variety of pru - dential and conduct of business rules. These
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