Street CRED: Key Takeaways from ‘Navigating the Future’ 2025

Below are key takeaways from the event:

• Dynamic structuring solutions. Fund raising has slowed down, the exit environment is challenging and interest rates have remained higher for longer periods. These factors have led to an acceleration of increasingly sophisticated fund structuring and financing transactions to meet GPs and LPs liquidity needs. GPs turned to open ended funds, evergreen funds and SMAs to assist LPs with liquidity and fund raising. For alternative exit strategies, GPs turned to continuation funds and NAV financing.
• GP financing on the up. GP and employee financing saw a significant increase in deal volume and size. This was a consequence of the slowdown in distributions and crystallization of carry. Additionally, there was increasing pressure from LPs for GPs to have greater skin in the game, which had a direct impact on the requirement for GP financing. 
• Role of private credit. Private credit has an increasing role to play in providing liquidity to the market both directly to GPs as a lender, or to support banks via the securitization of subline and/or NAV books. This growing involvement of private credit is helping to ensure that liquidity remains available in the market, even in challenging economic conditions.
• Rise of securitization structures. Securitization technology has become more prevalent. Already widely used by European banks for NAV loans, we expect further selective use in sub lines, as well as back-leverage such as loan-on-loans or securitizations of NAV/sub-line pools. Fortunately, there are several reporting agents out there to help borrowers comply with the stricter European securitization reporting rules. But watch out for the risk of “re-securitizations”!
• Accessing the insurance market. Rated Note Feeder issuance will continue to grow in Europe in 2025. European funds will focus on U.S. insurer investors, but we expect to see more European insurers entering the market. Interested parties should be aware that these transactions can have a significant lead-in time, and will require dedicated internal resource, especially for the first one. They may also require amendments to existing fund terms, so plan accordingly. Also, look out for Levered Rated Note transactions as an alternative to NAV financing. (You heard it here first!)
• Insurers as providers of leverage. More generally, the provision of leverage by insurers to funds will continue to grow, particularly UK insurers following the PRA’s Solvency II matching adjustment reforms last year. We also expect to see more flexible and bespoke structures. However, despite Solvency II, the regulation and investor appetite of insurers can still vary greatly.
• Shaking up the sub-line market? New lenders to the sub-line market – the mainstay product in the fund finance toolbox – are creating competition and opportunities, which should benefit everyone. A balance sheet is also available. Could this be the year we see more private credit enter the sub-line market?
• A nimble product. Our panelists shared solutions and insights for several fund structures from the established fund of funds setup through to the evergreen and open-ended spaces and examples of GP creativity to address complex and novel situations.