Typical Collateral Package In Cayman Fund Financing

The recovery of the Asian fund finance market over the past couple of years has reinforced the dominance of the Cayman Islands as the jurisdiction of choice for offshore fund structures. The security package remains a key consideration for lenders in fund finance transactions. This article provides an overview of the main types of collateral that lenders typically seek when lending to Cayman Islands fund vehicles under different types of facilities.

Subscription facilities

Security packages are tailored to the type of fund vehicles and facilities involved in fund financing transactions. The most common structure is the use of Cayman Islands exempted limited partnership (ELP) which does not possess any separate legal personality. The rights and obligations of the general partner and limited partners with respect to the ELP are governed by the limited partnership agreement (LPA) together with any relevant subscription agreements and side letters.