Patricia Lynch and Patricia Teixeira Discuss Private Margin Loans in Fund Finance in Private Funds CFO

Finance partners Patricia Lynch and Patricia Teixeira recently commented on the growing use of private margin loans (margin loans secured by investments in privately held companies) by private investment funds in an article for Private Funds CFO, noting their distinct position in the market. Patricia Lynch explained the difference between private margin loans and fund-level NAV facilities, which have also grown in popularity over the past several years. She also discussed the uses of these financings and their reception by fund investors.

Patricia Teixeira addressed enforcement and credit support mechanisms. She noted that while lenders technically have the ability to seize pledged shares in a default scenario, such a scenario is unlikely in practice, and that in the case of a default, lenders are more likely to enter into a dialogue with borrowers to explore other solutions.