Finance
Haynes Boone on the future of fund finance
This article is sponsored by Haynes Boone
As an asset class, private capital has experienced exponential growth in the past few decades, more than doubling its assets under management from less than $10 trillion globally in 2012 to more than $24 trillion in 2022. The fund finance industry has grown alongside it, starting from a nascent product in the late 1980s to an almost universal part in every fund’s capital structure today.
Fund sponsors now routinely include ‘bankable provisions’ for subscription line facility lenders in fund documents as anticipation for the use of this product by each of their funds, and are increasingly adding flexibility to expressly pledge their assets for use in net asset value (NAV) facilities.
Latest estimates put the global fund finance industry at more than $1 trillion. Many leading lenders in the space are operating at their maximum internal capital allocation. Nevertheless, they want to continue to maintain and expand their relationships with key sponsors. To that end, these institutions are turning to structured finance tools to reduce their capital reserve requirements, including credit facility ratings, conduit lending structures, securitizations, silent participations and capital relief trades.
Several leading rating agencies have expanded the scope of finance products they rate to include subscription line facilities, collateralized fund obligations and NAV financings. Once a predominantly European concept, ratings have been gaining ground in North America, with public and private ratings being requested by both borrowers and lenders. This trend is an attempt to attract different lenders, allow for higher holds from syndicate members due to enhanced capital treatment and offer more competitive pricing and terms.
Securitizations, capital relief trades and other capital market solutions are being explored by banks to help alleviate capital reserve requirement constraints. Early users of these tools are facing difficulties securitizing portfolios of facilities in an industry with private and bespoke terms, but as the pressure for solutions offering capital relief increases, the industry may begin to coalesce around a set of standardized terms that allows these capital market solutions to flourish.
Finally, a somewhat recent development in the industry has been the introduction of various non-bank lenders, primarily insurance companies. This has come with its own set of challenges, including the need to structure some deals with term and revolver components or include USD and alternative currency tranche lenders. But it has also come with opportunities to syndicate deals to a much broader pool of institutions.
NAV financings
The growth in NAV financings reminds market participants of the early stages of subscription line facilities. Many of the same criticisms once levied against subscription line facilities (which are now an industry-wide accepted and beneficial leverage and cash management tool) are being raised with respect to NAV financings. Despite all the criticisms, there has been growth on both the supply and demand side for NAV financings, with lenders and borrowers highlighting the legitimate uses and trying to educate LPs, rating agencies, regulators and others on the benefits of this form of leverage.
More than 70 percent of sponsors and lenders at NAVember (an annual NAV-focused event hosted by Haynes Boone) expected growth in their NAV financings portfolio in 2024. Lenders that offer this product include traditional subscription line lenders expanding into NAV financings, but also specialized non-bank lenders, offering flexible and tailored terms and structures.
Interest rate environment
Rising interest rates and higher pricing has been one of the most significant changes in the fund finance market in recent years. Our data shows that pricing has largely stabilized over the last two quarters, after adjusting for the anticipated regulations surrounding the capital reserve requirements that banks must hold for these products and some of the supply side issues caused by regional bank failures in 2023. While rates and pricing have increased at a much faster rate than prior business cycles, it’s important to note that current rates are not unprecedented, and markets have weathered high rates in the past and continue to do so.
Funds are still actively utilizing the product, with industry surveys from H1 2024 indicating that 81 percent of PE funds are maintaining the use of their subscription line facilities notwithstanding the higher interest rate environment and, as of September 2023, more than 95 percent of private capital funds have access to subscription credit facilities. A survey by Haynes Boone of 120 sponsors, lenders and other fund finance market participants found that 74 percent of institutions are expecting some level of growth in their fund finance exposure in 2024, with 63 percent expecting an overall increase in the fund finance market in 2024.
And even if pricing does not return to the lower levels seen in the past decade, subscription line financings still provide certainty and flexibility of funding, quick access to liquidity and reduce the administrative burden. With higher rates, funds are more judicious on the sizes of their facilities and increasing/decreasing the size to better match their predicted needs, and also on the tenor of outstanding borrowings.
Geographic expansion
The fund finance industry is well established in North America and Europe, with the Fund Finance Association hosting its 13th and eighth annual symposium in these respective geographies. Additionally, the Asia-Pacific region has been an area of recent growth, both domestically in APAC, but also with regional lenders entering the European and North American markets. This year, there was enough interest and participation in the Japanese market for FFA to launch a separate fund finance conference focused on Japanese sponsors, lenders and investors, and a discussion on some of the nuances and market practices in Japan – in addition to FFA hosting its sixth annual Asia-Pacific symposium in Singapore.
With the continued expansion of private capital and renewed fundraising efforts on specific types of investors and new geographies, fund finance lenders are adapting to the regional needs of private capital firms and the shifting supply and demand of financing in different regions, while law firms are expanding and gaining expertise across various jurisdictions as a response to the increased diversification of investor jurisdictions that funds are exploring.
Artificial intelligence
Artificial intelligence is poised to disrupt almost all industries and markets, and the private capital, banking and legal industries are no exception.
In the coming years, funds will develop AI tools to analyze potential deals and suggest optimal leverage levels/techniques and employ AI strategies to add value to existing portfolio companies. Lenders will utilize AI to assist with diligence and underwriting, monitor portfolio exposure and run risk assessments. Lawyers and law firms will use AI to assist with due diligence, drafting and negotiating documents, reviewing large volumes of data, and more readily identify market trends. Although AI cannot replace the judgment, experience, common sense and analytical capabilities of our industry’s experts, it will continue to be a tool to enhance those capabilities and become more accurate, efficient and productive.
Albert Tan is a partner and co-head of fund finance, and Aleksandra Kopec and Brent Shultz are partners in fund finance, at Haynes Boone
Finance
Bérangère Michel announced as BBC Group Chief Financial Officer
The BBC has announced that Bérangère Michel has been appointed to the role of Group Chief Financial Officer.
Bérangère brings extensive experience from her 16-year career at the John Lewis Partnership, where she held senior roles including Chief Financial Officer, Customer Service Executive Director, Operations Director and Finance & Strategy Director.
Prior to joining the John Lewis Partnership, Bérangère spent 11 years at the Royal Mail Group in a number of finance, change and strategy roles, including as Finance Director of the property division.
In an expanded role as BBC Group Chief Financial Officer, Bérangère will be responsible for the overall BBC Group financial strategy, with a remit across BBC Public Service, BBC Studios and the BBC’s commercial subsidiaries. She will play a leadership role and will sit on both the Executive Committee and, for the first time, the Board.
This position will strengthen the BBC’s financial leadership, support its transformation, and make the best use of the licence fee and commercial opportunities. Bérangère will report to the Director-General and will take up the role in early January.
Director-General Tim Davie says: “Bérangère brings a wealth of experience from her time at the John Lewis Partnership and will play a critical role in shaping our new financial strategy. I’m pleased to welcome her to the BBC, and to both the Executive Committee and Board.
“Bérangère’s appointment to this expanded role comes at an important time for the BBC, as we look ahead to Charter renewal and continue to accelerate our transformation to deliver outstanding value for our audiences.”
BBC Chair Samir Shah says: “The role of Group Chief Financial Officer will be hugely important as we build a BBC for the future, and I look forward to welcoming Bérangère to the Board.”
Bérangère Michel says: “I am delighted to be joining the BBC, an institution whose purpose and mission I have always admired. It’s a privilege to be part of shaping its exciting future at such a crucial moment and I cannot wait to get started.”
BBC Press Office
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Finance
ATI Promotes Longtime Leader to CFO and SVP of Finance
Rob Foster, incoming CFO of ATI Inc., effective Jan. 1, 2026 [Photo: ATI}
ATI Inc., a Dallas-based manufacturer of high-performance materials for the aerospace and defense industries, announced that James Robert “Rob” Foster will be promoted to senior vice president of finance and chief financial officer, effective January 1, 2026.
Foster succeeds Don Newman, who will serve as strategic advisor to the CEO beginning January 1. As previously announced, Newman will retire on March 1, 2026, and serve in an advisory capacity in that time to allow for a smooth transition.
“Rob is a proven P&L leader with enterprise-wide experience in the areas that matter most to ATI’s continued growth,” Kim Fields, president and CEO, said in a statement. “He brings deep expertise not only in finance but also as an operational leader. Rob played a pivotal role in the successful Specialty Rolled Products transformation, consistently helping ATI to deliver strong returns and shareholder value. I look forward to partnering with him as we enter our next phase of profitable growth.”
Foster, a longtime ATI leader, brings both operational expertise and financial discipline to the CFO role, the company said. He most recently served as president of ATI’s specialty alloys & components business, where he improved efficiency, grew capacity, and advanced the company’s role as a global leader in exotic alloys. Foster previously served as vice president of Finance, Supply Chain, and Capital Projects, overseeing ATI’s global finance organization, capital deployment processes, and enterprise supply chain performance. Earlier in his career, he led Finance for both ATI operating segments and the Forged Products business.
“I’m honored to become ATI’s next CFO,” said Foster. “ATI is well-positioned with a strong balance sheet, focused strategy, and significant opportunities ahead. I look forward to working with our team to drive disciplined investment, operational excellence, and long-term value creation for our shareholders.”
Newman added, “Rob is an exceptional leader who understands ATI’s strategy, operations, and financial drivers. He has delivered transformative results across the organization. I look forward to supporting a seamless transition as we pursue this next step in our succession planning.”
Before joining ATI in 2012, Foster held senior finance roles at API Technologies Corp. and Spectrum Control Inc., where he led ERP implementations, acquisition integrations, and internal control enhancements. He began his career as an auditor at Ernst & Young (EY).
ATI produces high-performance materials and solutions for the global aerospace and defense markets, and critical applications in electronics, medical, and specialty energy.
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Finance
Abu Dhabi seeks to build bridge between new media & finance – The Times of India
ABU DHABI: Instead of waiting for the future of media, Abu Dhabi is building it. The city played host this week to leading names from media and entertainment industries at the Bridge Summit, aptly named for seeking to position the emirate at the intersection between new-age media, innovation and investment.The three-day event at Abu Dhabi National Exhibition Centre from Dec 8 to 10 buzzed with energy, new ideas, collaborations and MoU deals as thousands of content creators, media brands, communicators, tech developers, AI innovators, investors and academics — who have been working in isolation — converged to brainstorm ideas, analyse future trends in the media industry and discuss ways to monetise them. How to get around the associated risks of privacy violation, fake news and narratives, defamatory content and online harassment were a natural corollary to the discussions.The idea of Bridge Summit originated at a lunch meeting in Abu Dhabi earlier this year between Sheikh Abdulla Bin Mohammed Bin Butti Al Hamed, chairman of UAE National Media Office, and Richard Attias, the Moroccan events producer associated with the Clinton Global Initiative, Nobel Laureates Conference and Davos Forum. The two discussed how UAE could give media, creators, tech innovators, social media outlets and investors a platform to connect and build the future of media. Eight months later, that dream turned into reality with Bridge Summit.Al Hamed, in his opening address, outlined Bridge Summit’s mission to unite media, technology, finance, and culture in building a more trusted, inclusive, and resilient information order.Speaking to TOI on the sidelines of the summit, Jamal Mohammed Obaid Al Kaabi, DG, UAE National Media Office and Bridge Alliance vice-chairman, said the forum seeks to secure a win-win situation for all, be it govts, media, content creators, social media platforms, gamers, investors and technology providers. “We are trying to help everyone — those who have a story to reach production, a company to reach a customer and govts to understand what’s happening in the market”.He added: “We believe that Bridge can be the brand that people will trust and look at in the future. We can connect it with media initiatives around the world. We believe that positive narrative can be supported through Bridge”.The global media and entertainment industry generated over $2.8 trillion last year, with gaming alone rivaling film and television at nearly $200 billion. Streaming continues to reshape consumption, while nearly 70% of content creators are already using AI tools.Rubbing shoulders at the summit were former heads of state, journalists, representatives of social media platforms, AI innovators, gaming developers, entrepreneurs and media influencers from across the globe; actors Priyanka Chopra Jonas and Idris Elba and footballer Gerard Pique lent it star power.Over three days of fireside chats, panel discussions, workshops and MoU signing, content creators and influencers took lessons from experts and peers on how to tell their stories better and hold their audience’s attention till the last frame.With artificial intelligence (AI) tools revolutionising the media space and content creation industry, engagements delved into how to maintain a judicious balance between human intelligence and artificial intelligence while tailoring content to suit users’ preferences and attention span.Sessions reflected on how the traditional print and TV journalism is being rapidly taken over by digital news content. Justin Smith, CEO of independent global news company Semafor, predicted that human journalist will continue to be relevant as the primary resource for original information, but must learn to harness the power of AI to add value. Richard Attias, who is on the Bridge board of directors, had a word of caution: “Human intelligence needs to always challenge artificial intelligence. We should not be losing the control of AI, which is like a robot”.According to UK journalist and broadcaster Emily Maitlis, agenda-based journalism is inevitable in the age of social media as one with a louder voice and reach, who can put out his version of the story more convincingly, tends to control the narrative. Adeline Hulin, chief of media and information literacy unit at Unesco, revealed that a global survey had found that 62% users don’t do any fact-checking before forwarding information online; most content creators are unaware of the international standards of freedom of expression; and just 20% users report hate speech. “Unesco has developed a global curriculum for media information literacy. We are working to integrate it with formal education and getting local partners to organise hackathons,” she said.Former deputy PM of UK Oliver Dowden advocated industry-led responsibility over sweeping regulation, saying there should be “clear guardrails” as creator content becomes the primary source of information for young audiences.Al Kaabi said Bridge Summit is just the beginning and “pop up” events will be held each coming quarter across America, Asia, Europe and Africa. “We want to hold a mini-Bridge in India. Also, there shall be more of Bollywood, not just Priyanka, at the next edition of the summit here,” he said.(The writer was in Abu Dhabi at the invitation of Bridge Alliance)
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