KBRA Assigns a Rating to BNP Paribas' Participation in a Capital Call Facility to Five Arrows Principal Investments IV
19 Jan 2024 | London
KBRA UK (KBRA) assigns a rating to BNP Paribas' ("BNPP") participation in a capital call facility in the form of a committed, secured facility (the “Facility”) to Five Arrows Principal Investments IV ("FAPI IV" or the "Fund"). The Facility is provided by a consortium of lenders including BNPP. The rating assigned was requested by BNPP as a participating lender in the transaction. Neither the Fund nor any of their associates have requested this report or the rating, and this report has not been prepared for or approved by any of them. KBRA has assigned an A rating and stable outlook to BNPP's €125 million commitment to the €625 million Facility.
The Lenders have a first priority security interest to the uncalled capital commitments of the Fund, including security over the right of the general partner to make capital calls. The Borrowing Base is divided into Qualifying Investors and Non-Qualifying Investors, with Qualifying Investors required to be approved by the Lenders in order to be included in such Borrowing Base and the uncalled commitments test. The Lenders’ recourse, however, is to all LPs of the Fund, including Non-Qualifying Investors. The uncalled commitments test requires the Funds to maintain uncalled commitments of 1.50x the amount of all Fund indebtedness, or 1.35x once 50% of the capital commitments have been called, such covenant being applicable to the Qualifying Investors only. To date, FAPI IV has raised €2,435 million in commitments from over 200 investors.
The Fund is managed by Five Arrows, the alternative assets arm of Rothschild & Co with offices in Paris, London, Luxembourg, New York, Los Angeles and San Francisco. As of August 2023, Five Arrows had an AUM of €23 billion. With over €9 billion of assets under management, the Corporate Private Equity business of Five Arrows is focused on investing in companies with highly defensive market positions, strong management teams, business models with high visibility of organic unit volume and strong unit economics, and multiple operational levers that can be used to unlock latent value. Sectors are limited to Data and Software, Technology-Enabled Business Services and Healthcare.
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