Subscription Finance Loan Agreement

If the fund sponsor persists in continuing with its existing lender for the underwriting facilities, the parties can use the existing precedent, which reduces documentation costs and streamlines execution. In any event, the most effective way is to base the final documentation on the existing loan documents for the main fund concerned, subject to any changes that are necessary on the basis of the fund`s organisational documents or as otherwise agreed. For a fund sponsor to successfully finance a fund from a fund, it is essential that the fund has the support of its investor. From the lender`s point of view, it effectively subscribes to the capital commitment of an individual investor and relies entirely on the solvency of that investor and on the strength of its commitment to finance deposits under the terms of the fund`s instruments of incorporation. A lender often requires some degree of investor involvement, whether in the form of a letter of credit or the notification of KYC information. Therefore, the cooperation of the investor is the key to setting up a mechanism on the best possible terms. investor transfers: as a general rule, subscription facilities are not responsible for an investor`s ability to transfer his or her stake in the fund; on the contrary, the transfer of investors is permitted, subject to (i) compliance with sanctions; (ii) notification to the administrative officer and delivery of the corresponding transfer documents; and (iii) the payment of a mandatory deposit to the extent that the transfer results in a lack of credit base. Where a lender ultimately relies on the creditworthiness of an investor`s parent company, it may be asked to issue a letter of action. The content of the registration letter may vary, but it is usually a succinct document in which the signatory confirms: (i) that it has an interest in the investor; (ii) acknowledges that the investor has subscribed to the fund; and (iii) agrees that it will provide an incentive for the investor to honour its payment obligations under the relevant fund agreement and the investor`s subscription agreement as soon as they mature. The latter clause can take different forms, depending on the parent company`s relationship with the investor and the requirements of the lender. For example, the investor`s parent company may accept that it has the consequence that the investor has sufficient liquidity, that it keeps the investor properly capitalized or that it simply influences the investor at best. . .

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