Fund Finance

The sun is shining on private equity, and private debt is largely to thank. With financing from funds and banks readily available, Alistair Hay of Cavendish asks whether PE has ever had it so good and how these funding solutions can co-exist.

Thomas Mayrhofer explains what he considers best practice for the use of credit lines.

Almost all funds the corporate pension invests in have the ability to use a subscription line of credit, according to UPS portfolio manager Brady Hyde.

Private equity firms that do not sufficiently disclosure how they calculate IRR could face enforcement action, writes Vivek Pingili, vice-president of compliance at consulting firm Cordium.

Officials at the public retirement plan behemoth are set to provide feedback on Monday.

Guidance announced this week on how subscription lines should be used by fund managers comes at a time when the industry is getting to grips with best practice on this now controversial issue.

Quarterly reports to investors must be explicit on the use of subscription credit lines, while LPs must ask for data that discounts the impact of borrowed cash, the lobby group recommends.

Demand for subscription credit lines is now being driven by the needs of separate accounts, say Jeff Johnston and Mike Mascia of the Fund Finance Association.

Olivier Carcy, who oversees a $3.2bn private equity programme at wealth manager Indosuez, said LPs should be compensated for the use of their credit rating.

Firms should review whether capital from reinvestment or subscription credit lines should be included in IRR calculations.