Fund Finance Symposium 2025: Industry Growth and Evolution

The Ropes & Gray fund finance team attended last week’s Fund Finance Association’s 14th Annual Global Fund Finance Symposium in Miami. The event brought together fund managers, financial institutions, legal experts, and other industry stakeholders to discuss the latest trends in fund finance and predictions for the market’s continued evolution in 2025. Below are our key takeaways from the conference:

Market Maturity, Product Innovation and a Borrower’s Market

Panelists highlighted the continued resilience of the fund finance industry and the robust growth experienced by the industry in 2024, with discussions underscoring the importance of adaptive strategies and innovative financing structures. The fund finance industry is maturing with fund finance products now viewed as essential financial tools that help optimize the use of capital and drive greater and more efficient returns for LPs.

• On the supply side, a formerly bank-dominated market has expanded to include private credit providers and insurance companies. The solidification of fund finance products as a permanent asset class has led to greater participation by both banks and non-bank lenders, resulting in more efficient transactions that are customized to borrower needs.
• The competition in the market is favoring borrowers. An increase in investor and manager demand is being matched by lenders' efforts to provide more capital to clients on a cost-effective basis. The market is becoming more efficient at matching sources of capital with structures that extend beyond the traditional subscription facility.
• Borrowers have more negotiating power, with lenders demonstrating a willingness to offer flexible and borrower-friendly terms and to tailor transactions and create bespoke structures (including rated products, uncommitted lines and umbrella facilities) to meet the evolving needs of borrowers. Strong relationships and lines of communication between borrowers and lenders continue to be key in a market that is increasingly advancing borrower-friendly terms and reduced pricing.

Continued Evolution and Role of NAV Facilities

NAV facilities continued to be a significant topic of discussion. The Institutional Limited Partners Association (ILPA) guidelines on NAV facilities released in late 2024 emphasized transparency and proactive communication between GPs and LPs. The guidance is reflective of the growing importance and acceptance of NAV loans in the market as a product that is beneficial in creating value to funds and their investors.

• NAV lending is becoming more common across asset classes, from private equity to secondaries funds, with utilization expected to increase.
• The vast majority of NAV facilities are being used primarily for liquidity, recapitalizations and add-on acquisitions with only a small portion of NAVs being used for distributions.
• The expectation is that NAV loans will become standard financial tools for mature funds, and that their use will become as prevalent at the fund level as acquisition financing has become in the LBO context.

The Future of Securitization in Fund Finance

The latest innovation in fund finance technology is the interplay between fund finance and securitization. Market growth and increased demand for capital have prompted an increased use of securitization in fund financing. The panel discussed two types of securitization transactions.

• GP-led and LP-led collateralized fund obligations (CFO) are being used as a fundraising tool and a way to access insurance capital and non-bank lender capital.
• The securitization of subscription credit facilities is a tool being used by banks to access non-bank capital and increase the supply of dollars available to the fund finance market. The rapid growth of the fund finance market has continued to outpace bank balance sheets, and securitization will help alleviate some of the capital constraints arising from bank capital requirement regulations.
• Products encompassing elements of securitization are likely to be an area of significant growth in years to come, given that they offer balance sheet relief, risk diversification, and cost reduction in borrowing.

Thank you to associates Adison Brown and Erin Daley for their help in preparing this post.

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