What are the typical terms/rates for capital call lines or personal lines of credit through your firm? I know a lot of the banks offer (JPM, SVB/First Citizens, Citizens, etc.) but they're incredibly secretive about rates, LTV, minimum/maximum loan size, and what assets they're collateralizing (GP/GP+carry/unsecured) for firms that are not yet on their platform. Seems super shady - getting info on any other type of loan is not this hard...Any comps from people that have been offered these loans by one of these banks through their firm?
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You mean for getting leverage on your carry/co-invest?
Yep, either to add leverage to your co-invest or simply as collateral for a loan to access liquidity for other purposes. Obviously, the two use cases I've suggested have different risk profiles so would assume different pricing/LTV/etc but the questions remain the same: (1) what loans are out there to collateralize co-invest and/or carry and (2) what are the terms other ppl have seen on these?
Have a revolver. Interest rate is ~8.5% fixed. Interest is monthly. Closed last year. The minimum line was $500k, IIRC. I forget the exact math but was capped at something like 40-45% of your commitment. However, you are able to use 100% of the line (max it out) before you have to put in your own capital (i.e., you don’t have to find 40/60 for each dollar called). The line gets priority for 100% of distributions if drawn. Straight line amortization for the amount drawn at the end of the investment period. Basically use it to manage liquidity. The upfront cost was inconsequential other than time. Recommend everyone who can obtain one have one. Can always not use it.
Thanks. Is the interest cash or PIK? Recourse or non-recourse financing?
Interest is monthly in cash. There’s a personal guarantee.
In a prior role we had 75% LTV leverage on NAV (not commitment) at SOFR+1.5%, paid in cash quarterly on average drawn balance. It was not from one of the banks listed in this thread. No personal guarantee or recourse, but the loan was contingent upon employment with my former employer (institutional relationship) and became immediately due and payable once no longer employed there (for any reason).
Thanks for the details - intense terms! Cannot imagine getting a $500k loan and having to cough that up all at once at end of employment...
Was that for PE or HF (going off your title)? I'm just impressed at the rate if they allowed a private valuation to count towards LTV at 75%. Also was that pre-2022 with that pricing?
That was both pre- and post-2022 for PE (not sure why that would matter, unless you’re suggesting the lender is even aware of the concept of overmarking?).
We had up to $10mm of leverage available (at least at the associate level, no idea what higher levels have access to) and I know a few people my year who used it. I.e. they set up a friends and family LLC to max out coinvest.
I have $100K with First Republic (booked now as JPM) at MAT12 + 1% which works out to around 7%. Interest payable monthly, used to fund 100% of capital calls. My loan is personally recourse/liable to me.
Any idea if this same product is available from JPM? I heard it was no longer offered after they acquired FR but haven’t actually stopped in to validate.
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