The Silicon Valley Bank crisis had a broad impact on businesses across many industries, and investors in the private capital space are not unaffected.
In a Preqin article, asset management partner Debra Lussier and portfolio manager and director at Ropes Wealth Shruti Bansal share insight into how the crisis has presented concerns for private capital fund managers. “[Fund managers] have certain contractual obligations with banks from whom they’ve borrowed money that capital calls have to be made into those accounts. There has been a concern about some regional banks. LPs are raising their hands saying they don’t feel comfortable funding into those accounts; they don’t want distributions to be made to them if [fund managers] are banking with those institutions,” Debra said.
On the outlook for investors across a broader spectrum, Shruti said, “right now, if consumer confidence continues to wane we’re going to see bank shut downs. I always tell clients, the risk to me is not knowing what we don’t know. Known risks I can manage and plan for. The next wall of corporate maturity doesn’t hit for another two-to-three years, what if the rates go back down?”
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