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Structuring Collateralized Fund Obligations: Benefits, Variations and Key Considerations

A Growing CDO/CLO and Fund Finance Liquidity Solution

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, October 26, 2023

Recorded event now available

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This CLE webinar will discuss collateralized fund obligations (CFOs), which have become an increasingly popular investment vehicle for securitizing portfolios of alternative assets. The panel will explain the history, structure, and variations of these alternative financing vehicles and identify key issues and considerations that should be addressed when contemplating a CFO structure.


Over the past several years, CFOs reached new heights in issuance volume. Although CFOs have been somewhat under the radar, they are gaining market acceptance and momentum among asset managers, owners, and investors. The CFO is a transformational technology for vehicles designed to finance limited partnership interests in private funds and other assets.

While CFOs can take various forms, they are created when a bankruptcy-remote special purpose entity (the CFO issuer) acquires a diversified portfolio of underlying fund interests, including private equity funds, hedge funds, private credit funds, infrastructure and real estate debt and equity, and other similar investments. To finance that acquisition, the CFO issuer issues tranches of rated notes and equity, which are secured by the underlying fund interests owned by the CFO issuer or its subsidiary. More senior tranches benefit from credit enhancement features, and when necessary, interest and principal payments that would otherwise be allocated to junior tranches are redirected to the senior tranches.

The structure of CFOs resembles a hybrid of a net asset value (NAV) facility and a collateralized debt obligation (CDO). CFOs utilize the tranche and collateral structure of CDOs while incorporating the loan-to-value metrics found in NAV facilities. Due to the restrictions on transfer of limited partner interests, the underlying fund interests are typically held by a subsidiary of the CFO issuer. In this type of structure, an investment company--the CFO issuer--acquires a stake in a pool of private equity funds through its subsidiary. The CFO issuer also acquires interests in other portfolio assets, such as money market funds and other liquid products.

One of the attractive features of a CFO is that it can be tailored to meet many different needs and situations. However, there are two primary structuring challenges: (1) the timing of dividends and other distributions paid to investors on these investments are difficult to predict and (2) most private equity investments require an investor to commit to making capital contributions when called.

Listen as our authoritative panel discusses the nuances of structuring CFOs, including the asset-based lending nature of the rated notes that underpin these deals and the complexity of cash flows, liquidity needs, and legal considerations.



  1. History and background of CFOs
  2. Definition of a CFO
  3. Structure of a CFO
  4. Types of CFO portfolios
    1. Identified pool vs. blind pool of assets
    2. Third party vs. affiliated funds
    3. Number of funds
    4. Age of private financial assets
    5. Fully drawn vs. ongoing commitments
    6. Types of assets
  5. CFO structuring challenges
    1. Timing of dividends and other distributions are difficult to predict
    2. Private equity investments require an investor to commit to making capital contributions when called
  6. Closing a CFO: timing and execution
  7. Payments and distributions
  8. Advantages and disadvantages of CFOs
  9. Additional issues and considerations


The panel will review these and other key issues:

  • What is the history and background of CFOs?
  • How are CFOs structured?
  • What are some variations of CFOs?
  • What are the advantages and risks of CFOs?


Kerfoot, Matthew
Matthew Kerfoot

Proskauer Rose

Mr. Kerfoot focuses principally on fund finance and structured finance transactions. He has held leadership positions...  |  Read More

Lima, Courtenay
Courtenay Myers Lima

Latham & Watkins

Ms. Myers Lima is a member of the Capital Markets Practice and Financial Institutions Industry Group. She has broad...  |  Read More

Tiller, Ramya
Ramya S. Tiller

Debevoise & Plimpton

Ms. Tiller is in the firm’s Finance Group and has experience in a broad range of financing transactions,...  |  Read More

Yetis, Ahmet
Ahmet Yetis

Managing Director, Private Capital Advisory Group

Mr. Yetis is a Managing Director in Evercore’s Private Capital Advisory group, leading Structured Capital...  |  Read More

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