Fund Finance – Taking Security Over A Limited Partnership Interest

While subscription line facilities continue to be the most common type of financing that we see in the fund finance space, the last 12 months have seen a noticeable increase in the number of Cayman fund finance deals involving net asset value (NAV) facilities.

One of the key considerations that Cayman counsel must consider for NAV facilities is the form of security required by a lender and how that differs from capital call security in a typical subscription line deal. NAV facilities are secured by the assets of the fund itself which often include equity interests in Cayman vehicles that hold investments of that fund.

In a Cayman context this may involve security over limited partnership interests in a Cayman vehicle and this client briefing seeks to address the issues involved when security is granted over limited partners' interests in a Cayman exempted limited partnership (an ELP).