In The Wall Street Journal, Debra Lussier Comments on the Shifting Bank Preferences of Private Equity Firms

Midmarket private-equity firms are increasingly broadening their banking relationships, often opting for larger institutions, to hedge against the fallout from the demise of Silicon Valley Bank, a major lender to private-market fund managers and their companies.

Asset management partner Debra Lussier told The Wall Street Journal that, “we see managers and investors in PE funds not wanting to [put money] into Silicon Valley Bank Bridge Bank accounts yet,” despite FDIC guarantees.

As of early last Thursday, the bank was accepting investor requests to avoid capital calls and make deposits, Debra shared. It may take 90 to 120 days to set up new capital-call facilities with other banks, which could leave borrowers exposed.

“An existing capital-call facility may expire before the new one can be set up,” Debra said. “PE managers are grappling with that timing differential. And we certainly have been talking to clients about that.”