Innovative Financing Strategies: Exploring Subscription Facilities

Check out this practice note discussing subscription facilities. A subscription facility is a line of credit to an investment fund typically secured by the fund’s right to issue capital calls to investors. The fund then repays these loans with the capital contributions received from its investors. Fund managers use these facilities (also called capital call facilities) to contend with the lag time between the issuance of a capital call and receipt of the distribution.

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Related Content

• Subscription-Secured Financings: Enforcement vs. Perfection
  Read this discussion of the mechanisms available to a lender to protect its rights in collateral under a subscription-secured finance facility.

• Subscription Facility Exclusion Events
  Review this practice note focusing on the market-accepted circumstances triggering the exclusion of investors from a subscription facility borrowing base, the rationale for such exclusion events, and frequent comments and perspectives relating to documentation of the same.

• Exclusion Event Definition in Subscription Facilities
  Use this definition of exclusion event clause in a subscription facility to describe the triggers that would remove an investor’s capital commitments from the borrowing base in that facility. These are the events that are likely to impact the investor’s financial capability or legal obligation to fund capital contributions to repay the subscription facility.

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