Key issues and a possible fix for capital call financing

By Stacey Overholt and Lorraine Pao, Maples and Calder (Hong Kong)
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Cayman Islands private equity (PE) funds are often established using a Cayman Islands (CI) exempted limited partnership (ELP). It has become increasingly common for an ELP to use credit facilities secured by the right to call and receive capital contributions from its limited partners (LPs) to provide liquidity and enable it to seize investment opportunities.

This article explores key issues that arise when an ELP is putting capital call facilities in place, and explores a possible solution to issues in these transactions.

Stacey Overholt Maples and Calder (Hong Kong)
Stacey Overholt
Maples and Calder
(Hong Kong)

A challenge in fund financing is balancing the legitimate commercial concerns of the general partner (GP) for confidentiality and not wanting to approach the LPs against the lender’s need for disclosure and certainty of cash flow.

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STACEY OVERHOLT and LORRAINE PAO are partners at Maples and Calder (Hong Kong)

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Maples and Calder (Hong Kong)
53/F, The Center, 99 Queen’s Road Central

Hong Kong
www.maplesandcalder.com

Contact details:

Tel: +852 3690 7441

Email: stacey.overholt@maplesandcalder.com

Tel: +852 2971 3096

Email: lorraine.pao@maplesandcalder.com