Fried Frank has added a partner in a bid to take advantage of the growing asset-backed lending market.
The New York-headquartered firm has appointed Duncan McKay to its debt finance practice, according to a statement. He specialises in arranging complex financings for sponsors of private equity, secondaries, real estate, infrastructure, private debt and other alternatives funds.
McKay joins from Kirkland & Ellis, where he spent seven and a half years as a partner, according to his LinkedIn profile.
“In the past few years, the use of subscription lines, asset-based and NAV facilities, and GP securitisation and other private placement transactions have become increasingly common across the global funds industry,” said J Christian Nahr, head of Fried Frank’s global leveraged finance practice, in the release.
Forms of asset-backed lending, such as preferred equity and NAV loans, have grown in popularity as LPs have come to see them as a way to create liquidity without having to sell assets on the secondaries market.
Growth has been driven by specialist players such as Whitehorse Liquidity Partners, which is targeting $5 billion for its fifth flagship fund, and traditional secondaries investors. In December, Secondaries Investor reported that AlpInvest Partners was launching a fund focused on preferred equity, NAV loans and credit secondaries deals that do not match the return profile of its flagship PE secondaries fund.
Preferred equity and NAV lending shot up during the worst of the pandemic, as sponsors looked for liquidity to prop up portfolio companies and make opportunistic add-on acquisitions. Fifty-six percent of buyers surveyed in Evercore’s H1 2020 secondaries market report said they offered preferred equity during the period, compared with 21 percent at the end of 2019.