Navigating the Evolving Fund Finance Landscape: Simpson Thacher's Strategic Shift

Global law firm Simpson Thacher & Bartlett has announced a significant shift in its fund finance practice, promoting two partners to co-lead the group. This move comes amidst a surge in demand for NAV facilities and other innovative financing tools, as the private equity industry navigates an increasingly complex landscape.

Unlocking New Possibilities in Fund Finance

Empowering Clients with Bespoke Financing Solutions

The promotion of Jennifer Levitt and Julia Kohen to co-heads of the fund finance practice at Simpson Thacher reflects the firm's commitment to staying at the forefront of this rapidly evolving industry. Levitt, based in the firm's Los Angeles office, has been instrumental in developing fund-level financing solutions for sponsors across a diverse range of asset classes, including private equity, real estate, and infrastructure. Her expertise in subscription facilities, NAV loans, and GP stake investments has proven invaluable in helping clients navigate the ever-changing landscape.Kohen, who operates from the firm's New York office, has a proven track record of representing financial sponsors in subscription credit facilities and NAV loans across a wide spectrum of strategies, from private equity and real estate to energy and infrastructure. Her experience in advising on management lines and co-investment loan programs further underscores her deep understanding of the intricacies of the fund finance market.

Adapting to Market Trends and Driving Innovation

The co-leadership of Levitt and Kohen comes at a critical juncture, as the fund finance market continues to experience significant growth and diversification. The industry is witnessing an increased adoption of NAV/asset-based financing, particularly within the GP-led secondary market, a trend that Simpson Thacher has been actively monitoring and advising on.According to Lauren King, co-head of the fund transactions practice at Simpson Thacher, the firm has advised on 18 preferred equity or NAV deals totaling more than $6.7 billion within the GP-led market from November 2022 to October 2023. This surge in activity reflects the growing appeal of these financing solutions as LPs and GPs alike seek to unlock liquidity and capitalize on strategic opportunities.

Navigating the Evolving Regulatory Landscape

The rising popularity of fund finance tools has also prompted regulatory bodies to take a closer look at their usage within the private equity industry. In July 2023, the Institutional Limited Partners Association (ILPA) issued guidance regarding the use of these facilities, underscoring the need for increased transparency and alignment of interests between GPs and LPs.As the fund finance market continues to evolve, Simpson Thacher's co-heads, Levitt and Kohen, are poised to lead their team in developing innovative and bespoke financing solutions that address the unique needs of their clients. Their deep industry expertise and commitment to staying ahead of market trends will be crucial in navigating the increasingly complex regulatory landscape and ensuring that their clients remain at the forefront of the fund finance revolution.