Capital Call Facilities: Basics, Challenges and Opportunities

Capital call (aka "subscription" or "equity bridge") facilities have garnered attention recently due to their strong performance in the wake of the financial crisis.  The popularity of these facilities grew substantially in 2012 and 2013 despite fundraising challenges in the private equity market, with further growth anticipated as investment continues to climb and market players become more familiar with these facilities. 

Capital Call Facilities – The Basics

Capital call facilities provide short-term funding on a revolving basis to private equity funds to bridge the time between when an investment is made by the fund and when capital contributions are received from investors to finance that investment (typically between 30 and 90 days after a capital call notice is delivered to investors by the fund).  Loans are repaid with capital contributions once received from investors.