KBRA Affirms and Subsequently Withdraws the Rating Assigned to BNP Paribas' Participation in a Subscription Facility to Keensight Nova VI A S.L.P.

KBRA UK (KBRA) affirms and subsequently withdraws the A- rating assigned to BNP Paribas’ €64.8 million participation in a €239.1 million revolving credit facility (the “Facility”) to Keensight Nova VI A S.L.P. (the "Borrower"). In May 2025, the Facility was reduced from €606.8 million to €239.1 million, with BNP Paribas' share reduced from €144.0 million to €64.8 million. The Facility matures in June 2026, with an additional one-year extension options subject to lenders' discretion. The Fund is the sixth vintage in Keensight’s flagship strategy, which targets high-growth, profitable and low-to-mid-market companies across Western Europe, with equity investments ranging from €10 million to €400 million. The Fund comprises two parallel partnerships, Keensight Nova VI A and Keensight Nova VI B, with Keensight Nova VI A as the sole borrower under the Facility. The rating action reflects the continued strong credit quality of the LP base and the Fund’s stable performance since the previous surveillance.

Key Credit Considerations

Financial Covenants and Structural Features: The primary collateral and source of repayment for the Facility is the uncalled capital commitments (“UCC”) of the Fund. The Fund is required to maintain UCC from Qualifying LPs in an amount equal to or greater than 1.5x of the Fund’s total financial indebtedness, stepping down to 1.3x once 50% of capital commitments have been called. The borrowing base calculation also includes concentration limits on individual LP commitments. A failure to cure a breach of the financial covenant constitutes an Event of Default under the terms of the Facility Agreement. The lenders benefit from security over the general partner’s rights to issue capital calls following a continuing Event of Default. In addition, the Facility includes a Performance Ratio covenant requiring that the ratio of (a) the aggregate of the Borrower's NAV and any amounts distributed to LPs to (b) the aggregate of the commitments funded by LPs into the Fund, be at least 80%. This requirement effectively ensures that the Fund’s total value to paid-in capital (“TVPI”) remains at or above 80%, supporting alignment of interests by maintaining LP incentive to fund capital calls during the earlier years of the Fund’s life. In later years, a larger proportion of the TVPI will be represented by distributions which may offset the benefit of this covenant to the lenders. However, the Facility matures within the investment period of the Fund, and as such, during the life of the Facility it is expected that the majority of the TVPI will be represented by NAV rather than distributions.

Alignment of Interests: A failure to fulfil a capital call can result in the Defaulting LP losing rights to distributions from the Fund and restrictions from investing in future private capital opportunities. Furthermore, in the event an LP defaults with respect to their obligation to meet capital contributions, the Defaulting LP is subject to the application of various default provisions. Such provisions include but are not limited to (i) cancelling all or part of the Defaulting LP’s available commitment; (ii) selling or assigning the Defaulting LP’s interest; and (iii) suspending rights to distributions to the Defaulting LPs. These provisions are strong incentives for LPs to meet capital calls.

Credit Quality of LP Commitments: KBRA assessed the credit quality of the LPs comprising the Borrower as of June 2025. KBRA’s assessment of the credit quality of the LPs was evaluated using (i) for rated entities, the ratings assigned to the relevant LP or parent entity by KBRA or where a KBRA rating is not available, the public rating assigned by another rating agency and (ii) for unrated entities, KBRA's evaluation of the relevant LP's credit quality. Overall, the LPs' credit quality is in line with the LP base at previous surveillance.

Diversification of LP Commitments: The diversification of the LPs’ commitments is determined utilising an adjusted Herfindahl-Hirschman Index (“adjusted HHI”). As of June 2025, the number of LPs and Qualifying LPs are unchanged since last surveillance, and the diversification of the LP base is in line with previous surveillance.

No Waiver of Set-off Rights / Quality of Contractual Nature of LP Commitments: The Fund’s LPA does not contain an agreement by the LPs to fund their capital contributions without set-off, counterclaim or defence. As such, the amounts that the Lenders are able to call from an LP following an Event of Default under the Facility may be subject to set-off by that LP against any pending distributions to it or may be subject to any claims or defences that the applicable LP has against the Fund. This may result in the Lenders having to pursue the Borrower directly for repayment of the Facility, rather than being able to rely on their assigned rights to make capital calls ensuring that they will be repaid in full. As a partial mitigant in respect of the set-off rights, if there is a key Event of Default under the Facility, the Borrower is restricted from making any distributions to the LPs. Additionally, if any investor has exercised its set-off rights following a capital call by the Lenders, the Borrower is required to deliver distributions into the collection account for such an amount. However, this does not fully mitigate against potential claims that an LP may have against the Borrower in a default scenario.

Additional Claim to Distributions/Illiquid Assets: To the extent that some or all of the LPs default on their obligation to fulfil capital calls and repay the Facility, the Lender may have recourse to other assets of the Fund (as an unsecured creditor of the Fund). While this is credit positive and offers a secondary repayment source for this Facility, the assets of the Fund consist of private equity investments which KBRA views as complex and illiquid relative to other asset classes and there is no certainty with regards to the ability of the Fund to sell and realise sufficient value from these assets.

Rating Sensitivities

Decline in LP Credit Quality: A decline in the credit quality of the Fund’s LPs as a result of: (i) deterioration in the credit quality of underlying LPs; (ii) transfer of interests to LPs of lower credit quality characteristics; (iii) inclusion of LPs with weak credit quality characteristics; and (iv) weaker than expected LP diversification, may result in negative rating changes.

Improvement in LP Credit Quality: An overall higher credit quality of the Fund’s LPs as a result of: (i) improvement in the credit quality of underlying LPs; (ii) transfer of interests to LPs with better credit characteristics; (iii) inclusion of LPs with strong credit quality characteristics; and (iv) stronger than expected LP diversification, may result in positive rating changes.

Underperformance of Fund Assets or Investments: A decrease in the Fund’s NAV due to underperformance of the Fund’s underlying assets or investments may jeopardise debt repayment as the deterioration of the Fund may, for example, elicit hesitation of the Fund’s investors to fund their respective capital calls regardless of their contractual obligations to do so and the underlying investors’ security and protections to the Lender.

Quantitative Rating Determinants

Asset Quality: KBRA determined the asset quality based on the blended quality of the LPs’ credit quality and the equity risk of the distributions. This blended approach to derive the weighted average asset quality reflects the idiosyncratic nature of LP capital commitments and distributions to the Fund’s LPs, as well as the primarily investment grade LP base and the exposure to equity. Offsetting this asset quality determination is the asset base which would support the repayment of the Facility, as discussed in the asset coverage determinant.

Asset Coverage: Asset coverage is calculated assuming the maximum permitted Facility draw, in compliance with the covenants of the Facility Agreement. At the current commitment level, the Facility requires indebtedness to be covered by at least 1.3x in uncalled commitments, subject to compliance with the Performance ratio. In the Asset Coverage calculation, KBRA includes both the uncalled capital plus the fund assets, including drawn amounts under the Facility which are invested into assets as an additional source of asset coverage. This results in a minimum total asset coverage of over 300%.

Liquidity: As the Fund makes investments, the principal source of collateral value and debt service shifts from the remaining capital commitments (which is considered more liquid, with known contractual value and short time to fund) earlier in the Fund’s life to a greater reliance on the investment value of assets in the Fund itself (considered less liquid, with limited price transparency, greater complexity and uncertain realisation timing).

Duration: Duration has been determined based upon the remaining term of the Facility, maturing in June 2026, subject to extensions.

Cash Flow Analysis: The primary source of repayment for subscription facilities consists of LP pledges to pay commitment amounts; the Lender is paid only when the LPs remit their payments. In any case, should an LP fail to pay, the LPA places the burden of payment on the remaining LPs on a pro rata basis. Therefore, KBRA analyses repayment capacity in the context of the quantitative determinants described above.

Qualitative Factors

Manager Review: Established in 2013 following a spin-out from Rothschild, Keensight Capital is a pan-European growth buyout firm with a 25-year track record and approximately €6 billion in assets under management as of June 2025. Keensight operates in more than 90 countries across the globe with a presence in Paris, London, Boston, and Singapore. Across its six funds, the firm has invested in 88 companies and completed 51 exits.

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