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Due Diligence in Fund Finance Transactions: Key Considerations for Lenders in Subscription and NAV Facilities

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, August 10, 2023

Recorded event now available

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This CLE webinar will discuss various aspects of due diligence which should be conducted in fund finance transactions, including subscription credit facilities (SCF) and net asset value (NAV) credit facilities. The panel will describe some of the current diligence practices typically involved in each type of credit facility and discuss potential changes to due diligence in these fund financing transactions.


Fund financing transactions have traditionally been viewed as low risk, but recent incidents involving alleged fraud have caused concern for lenders industrywide and heightened the focus on due diligence in fund financing transactions. Lenders and their counsel must have a thorough due diligence process to follow for each type of transaction.

Due diligence reviews for SCFs are typically focused on four types of documents--subscription agreements, limited partnership agreements, side letters, and offering documents--with a focus on the enforceability of the documents and the security interest in the underlying collateral. Lender's counsel must determine the nature or identity of the investors, the number of investors, and the substance, length, and complexity of any side letters.

Due diligence remains important in NAV credit facility transactions as well and should include a review of: (1) the documents relating to the fund's underlying investments (e.g., a mortgage for a real estate fund), (2) the organizational documents for the borrower and any related parties (e.g., any fund guarantor), and (3) depending on the nature of the fund's investments, a collateral audit, on-site inspections, or appraisals.

Listen as our authoritative panel discusses due diligence of SCFs and NAV credit facilities.



  1. Due diligence in the current fund finance environment
  2. Due diligence for subscription credit facilities
    1. Subscription agreements
    2. Limited partnership agreement
    3. Side letters
    4. Private placement memoranda
  3. Due diligence for NAV credit facilities
    1. Documentation relating to underlying investments
    2. Organizational documents of borrower and guarantor
    3. Underwriting the collateral and facility


The panel will review these and other important issues:

  • Why has due diligence become particularly important in the current fund finance environment?
  • What are the key provisions in a limited partnership agreement that could affect the ability of a fund to enter into an SCF?
  • What are some red flags that lenders should be aware of in conducting due diligence on a NAV or SCF deal?


Cheng, Mimi
Mimi C. Cheng

Simpson Thacher & Bartlett

Ms. Cheng is a Partner in the Banking and Credit, Fund Finance and Backleverage and Investment-Backed Financing...  |  Read More

Holland, J. Eric
J. Eric Holland

Duane Morris

Mr. Holland practices in the area of corporate law with a focus on complex financings and commercial lending....  |  Read More

Levitt, Jennifer
Jennifer J. Levitt

Simpson Thacher & Bartlett

Ms. Levitt is a member of the Banking and Credit Practice. She regularly represents financial sponsors in connection...  |  Read More

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