2025 Global Investment Conference: A look at the evolution of fund finance structures and the opportunities for investors

Fast forwarding to today, SLC Management recently closed a subscription finance deal that is fixed rates, over five years in term, rated AA+ and earning a strong value relative to other private credit classes. “You are funded, you have excellent quality and you have great return, so it’s evolved quite a bit from the original bridge facility structure,” he said.

Read: Sun Life consolidates asset management businesses to form SLC Management

Returning to the evolution of fund finance structures, Delisle noted general partners have been using other financing structures more actively, including GP fees, GP stakes and NAV financing.

In time, limited partners started to sell their commitment positions into secondaries funds to either generate liquidity or rebalance their portfolios through secondaries, he said. “They became active managers in their private quite portfolios, where other funds started to buy these positions at a discount.”

Additional structures include continuation funds, where a general partner invites an anchor private equity or pension fund to come in as a limited partner to hold legacy trophy assets, and private credit funds that would lend into portfolio companies in lieu of banks.

“All of these structures are connected by the fact they’re looking to solve a problem of either liquidity or yield and they all need some form of leverage,” said Delisle.

He also highlighted three considerations for investors looking to get into the asset class: value protection, cash direction and enforceability. In terms of value protection, he recommended investors have some covenants with strong loan-to-value ratios. “You want to consider concentration and diversification. These are very important elements to structure your investment.”

Read: Institutional investors increasingly eyeing private assets amid shifting interest rates, diversification push: report

Investors also want to be able to control the cash, he said, noting they’ll want a security interest on the account where all of the cash comes from portfolio companies and from limited partners, so they can force a repayment of the credit facility if there’s a triggering event.

And enforceability, which he acknowledged is often overlooked, is very important because all of these investment structures are contractual in nature. “You have to go through the trouble of going line by line to make sure there isn’t something that’s going to allow for the value protection or the cash direction to fall away.”

Finally, Delisle outlined the steps for choosing a manger for investing in this asset class. These include alignment of interest with the sponsor and limited partners, a proven track record and a rigorous underwriting process. “If you can confirm these, you may earn some strong risk-adjusted returns and diversity to your portfolio.”

Read more coverage of the 2025 Global Investment Conference.