SD-11.6 — Fund Finance & Capital-Call Liquidity

Business Domain: BD-11 Treasury, Cash & Collateral (Middle office) · Applies: PRIV

Purpose

Manages the financing of a private-markets fund and the liquidity to meet its capital calls. SD-11.6 is the private-fund treasury capability: it arranges and manages the subscription (capital-call) credit lines, NAV facilities and hybrid facilities a fund uses, and it ensures the cash is there to fund the capital calls the fund draws against its commitments — whether from the facility, from realisations, or from the LP’s own resources. Fund finance has grown into a large, distinct discipline with its own instruments and lifecycle. It is not the pace of commitments — that is SD-01.10 Commitment Pacing, which decides how fast to deploy — and it is not the operational processing of a capital call, which is SD-12.8; SD-11.6 arranges the funding, SD-12.8 processes the call, SD-01.10 sets the pace.

Service Operations

Arrange and manage subscription credit lines — the capital-call facilities secured on the fund’s uncalled LP commitments, used to bridge the timing between investment and capital call.
Arrange and manage NAV and hybrid facilities — the facilities secured on the fund’s portfolio value, or on both the commitments and the value, used for liquidity, follow-on capital and distributions.
Manage facility drawdown and the borrowing base — draw, repay and manage the facilities within their borrowing-base and covenant terms.
Fund capital calls — ensure the cash is available to meet a capital call as it falls due, from the facility, from realisations or from the LP’s resources.
Monitor facility covenants and cost — track the covenant compliance and the cost of the fund’s financing.

Inputs and outputs

Inputs: the LP commitments (PM-06) and capital-call schedules (PM-07); the fund and vehicle record (PM-01); the cash-flow forecast from SD-09.7; facility agreements; the commitment-pacing plan from SD-01.10.
Outputs: the funding arranged for capital calls and the facility position — consumed by SD-12.8 Capital Call & Distribution Processing (which processes the call against the funding), SD-11.2 Liquidity Management, and BD-16 investor reporting.

Entities

Consumes: PM-01 Fund & Vehicle, PM-06 LP Commitment, PM-07 Capital Call, E-03 Portfolio / Mandate; the SD-01.10 commitment-pacing plan; the SD-09.7 cash-flow forecast.
Owns: none as a master entity.
Open question: a Credit Facility entity — the subscription line, NAV facility or hybrid facility (and the funding-book facilities of SD-11.8) as an owned, governed record with its borrowing base, covenants and drawdown history. Shared with SD-11.8.

Standards

ILPA guidance on subscription-line use and disclosure.
The fund-finance market practice — the subscription, NAV and hybrid facility structures.
The limited-partnership agreement as the source of the uncalled commitment a subscription line is secured on.

Open extensions

A Credit Facility entity — the open question above.
The borrowing-base sub-model.
The Service-Operation-level input/output contracts.