The Loeb team is back from a fruitful week in Miami at the 14th Annual Fund Finance Association (FFA) conference. Every year brings more participants to the conference—this year, over 2,500 professionals came to the Fontainebleau to share knowledge and meet clients and prospects. Over the past few years, it feels as though the majority of our Finance Department's hours (and certainly a majority of my hours) have been spent in the fund finance space, either on subscription credit facilities, hybrid facilities, NAV facilities, management lines or co-invest PLP lines, and it was great to see so many present and future clients in person.  

As platinum sponsors of the FFA conference, Loeb receives a speaking slot on a panel, and I drew the short straw (err… the high honor) of representing the firm, which meant that last week I was a panelist on Monday afternoon, Feb. 24, on the “Atypical Collateral Underwriting Considerations” panel. We had a few hundred people in the room (which was great), although we were opposite an understandably more popular panel topic—"Private Credit: Navigating the Golden Age" (which I am told was standing room only). So if you missed my panel (no offense taken), here's the quick recap:

•  Separately Managed Accounts (aka SMAs): This is a structure where Loeb has extensive experience documenting facilities for our clients and helping them avoid some of the trapdoors that come with having only a single investor in the borrowing base. These structures are becoming more popular as sponsors work to deepen relationships with particular sponsors and create bespoke solutions. One common source of friction in the financing portion of these deals involves requests for investor letters / parent comfort letters to create privity between the lender and investor and tighten up the collateral package to give the lender additional structure protections that mitigate some of the risk, and also correct any potential deficiencies in the limited partnership agreement. The main takeaway is that lenders need to tell sponsors as early as possible in the transaction planning that they expect to receive an investor letter / parent comfort letter at closing to minimize any miscommunications with the sponsor and investor that sometimes result in lenders being pressured to waive the requirement that they receive such a letter (and, of course, work with experienced counsel to structure these transactions).
• Concentrated Borrowing Bases (aka Non-Granular Pools): Similar to SMAs, these are deals where there are few investors at closing, and one or two investors may constitute a large percentage of the borrowing base. Sometimes this is a feature and not a bug (and in those instances, lenders may also wish to consider requesting that they receive investor letters from the largest investors in the fund), but sometimes this is due to the failure of sponsors to communicate to lenders that certain investors may not make it to the finish line for the initial investor closing, resulting in a less diversified borrowing base at closing and possible angst among underwriters. Once again, the takeaway is that “communication is key.”
• Umbrella Facilities: These are subscription credit facilities where there are multiple funds that may share similar characteristics, governed by a single (albeit more complex) credit agreement. The obligations of the funds (or fund groups) are often several (as opposed to joint and several). While the legal documentation can often be messier, some sponsors like these structures due to the ability to minimize the payment of unused line fees by spreading utilization across multiple funds (my fellow panelist Richard Wheelehan from Fund Finance Partners modeled over $8MM in savings on unused fees in the first two alone for a particular sponsor, which certainly offsets the additional legal cost to put these structures in place), and some lenders like the chance to solidify relationships with sponsors where a new fund can be bolted onto the umbrella relatively quickly instead of having that sponsor shop the deal with other lenders. Loeb also has significant experience putting these structures in place on behalf of lenders.  
• High Net Worth (HNW) Investors / Retail Investors: Most lenders are seeing more HNW investors in facilities (as well as “retail investors,” which we defined as banks that aggregate pools of HNW investors). We're seeing more banks willing to lend to majority/pure HNW borrowing bases over the past year, mostly for their better clients, but not always. As more HNW investors look to enter the space (especially as institutional investors wait for returns from legacy funds), we expect to see more of these facilities in 2025 and beyond (particularly if proposals to allow 401(k) holders to invest directly in private equity gain traction).

I'm not going to have time to cover the other 19 keynote sessions and panels in this post, but I will say that the New York Football Giants fan in me was surprisingly charmed by keynote speaker Tom Brady. Knowing that the Giants had his number in two Super Bowls helps, and me knowing now that Tom Brady knows it all too well also warmed my heart, especially when he conceded that he'd be willing to give back two of his seven rings in exchange for beating the Giants in 2007 to complete a perfect season. His reminder that there's always something we can do to improve ourselves will echo in my ears for the rest of the year, and is motivation to tap out a Loeb Quick Takes post late on a Saturday night.

_{(In accompanying photo: Peter Beardsley, mid-sentence third from right at the 2025 Fund Finance Association Conference during the "Atypical Collateral Underwriting Considerations" panel)}