The continued and expanding popularity of capital call facilities to private equity funds in Cayman is largely due to their strong performance during the financial crisis, with very few reported incidents of investor defaults. In addition, the attraction of relatively low-priced financing (many such facilities are advanced on an uncommitted basis) is appealing to borrowers and the perceived low-risk nature of these facilities is attractive to several specialised lenders that operate within this market. The Cayman Islands has long been a domicile of choice for private equity fund formation and is therefore on the cutting edge of the ever-evolving world of capital call financing. While traditionally utilised by private equity funds to bridge the period between the time notice is served on investors instigating a capital call and the receipt of the resulting proceeds, such facilities have become increasingly used as part of a fund's investment strategy to make underlying investments.
February 06, 2014 at 07:03 PM
1 minute read
The original version of this story was published on Legalweek
With the Cayman Islands at the cutting edge of the capital call facilities explosion, Rob Jackson and Justin Hart look at the issues for lenders and their counsels
The continued and expanding popularity of capital call facilities to private equity funds in Cayman is largely due to their strong performance during the financial crisis, with very few reported incidents of investor defaults.
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