The long-term growth of the asset management industry has resulted in a significant increase in both the variety of fund structures (including open-end funds, closed-end funds, collective investment funds, common trust funds, group trusts, private equity funds, funds of funds, hedge funds and other pooled investment vehicles), and the overall number of funds. Fund sponsors and asset managers are constantly seeking credit to help meet liquidity needs or to provide leverage (gearing). On the one hand, funds may need or desire additional liquidity to, among other things, clear and settle trades, make redemptions (daily, in the case of open-end funds, or periodically, in the case of other funds), provide commercial paper back-up or, in the case of private equity funds, bridge capital calls; having credit available for liquidity will generally allow a fund to remain more fully invested than it otherwise might. On the other hand, funds may choose to employ leverage to boost investment returns, redeem auction rate or other preferred securities, retire other debt, or fund self-tenders.
For 2012 we closed 31 credit transactions involving these
funds totaling in excess of $3 billion, and in 2011 we
closed 37 such transactions totaling in excess of $3.8 billion.
Bryan Cave continues to experience dramatic growth in its involvement in these credit transactions on behalf of financial institutions and various funds and fund complexes. We have a thorough understanding of the needs and limitations of these funds and the banks, broker-dealers and others who supply credit to them, as well as knowledge and experience with the relevant legal documentation and terms, including the Investment Company Act of 1940, the Investment Advisers Act, ERISA, margin regulations, Articles 8 and 9 of the Uniform Commercial Code, the Internal Revenue Code, UCITS regulation, SICAV regulation, other various regulatory schemes, and offshore financing issues generally.
Bryan Cave's Fund Finance Team brings together lawyers from various disciplines and jurisdictions with an in-depth understanding of the related issues to best meet the needs of our clients, whether they are:
- Financial institutions or others providing credit to funds in the form of uncommitted lines of credit, committed revolving credit facilities, term loans, master repurchase agreements or other structures; or
- Funds seeking credit.
The Fund Finance Team continues to meet the needs of the firm's clients by:
- Concentrating the required legal knowledge and experience within a single working group, which allows it to operate more efficiently and effectively;
- Utilizing our in-depth knowledge of the ever-evolving “market” for credit terms; and
- Maintaining a library of forms of credit documentation that enhances speed of delivery, cost effectiveness and market-based knowledge.