H1 2026 at a Glance: Strong Deal Flow, Resilient Market Fundamentals
The first half of 2026 has built on many of the trends seen in 2025. We have continued to see a robust pipeline of deals, notwithstanding macro-economic uncertainty in global markets.
Our experience is that this has not materially impacted activity in the private fund debt market, with managers continuing to seek and obtain subscription line financing, NAV facilities and other forms of debt financing, including a continued utilisation of structured products within the fund finance ecosystem.
Overall, our Cayman Islands office has acted on more than 250 new fund finance transactions so far this year, with an additional 300 instructions on amendments and joinders and over US$23.2 billion in new money lender commitments.
23.2bn IN NEW MONEY LENDER COMMITMENTS
MatthewSt-Amour
Robin Gibb
Product Mix: Subscription Lines Dominate, NAV Facilities Gain Ground
In line with previous reporting periods, our fund finance practice continues to be dominated by subscription line facilities, accounting for approximately 57% of closed deals in the US market in the first half of 2026.
NAV facilities accounted for 22% of new facility mandates, compared to 18% over the course of 2025. This represents a slight uptick in both relative and absolute terms for NAVs, which shows some resilience after a lower-than-expected number of new NAV facilities over the course of 2025.
As well as the traditional subscription line and the now more established NAV facility offering, we are also continuing to see a broad ambit of other downstream fund financings that do not fit neatly into any particular category. Perhaps the most widely adopted facility in this category over the last few years is the backleverage facility. While such facilities remain a prominent feature, we continue to be mandated on a broad variety of bespoke, highly-structured debt financings, which may involve a rated note or have been structured to look and feel like a securitisation (without necessarily having all the features that would typically accompany this type of product).
Subscription Line Terms and Pricing: Margins Tighten in H1 2026
In the subscription line market, terms and pricing have remained largely consistent with what we saw towards the end of 2025.
For example, in terms of the proportion of committed vs. uncommitted, our experience in the first half of 2026 aligns closely with 2025. Committed facilities therefore remain the norm, but we have seen some managers obtain sizeable uncommitted facilities that offer more competitive upfront pricing and may complement their intended utilisation better. We expect uncommitted facilities to work best where there is a well-established lender-manager relationship, with that relationship compensating for less certainty in the legal documentation.
Hybrid facilities (that combine both a subscription line and NAV) have remained the exception rather than the norm, with the Cayman Islands office acting on only three "true" hybrids so far this year.
This suggests that both managers and lenders continue to see subscription lines and NAV facilities as separate product categories, serving a different function and best utilised at different stages of a fund's lifecycle.
Breakdown of Closed Transactions H1 2026
Committed vs. Uncommitted Subscription Lines (US market; new deals only)
2025 H1 2026
A particular feature that we are watching closely this year is tenor. While 1-2 years remains the frontrunner in terms of popularity, so far this year we are seeing a growing number of subscription lines with a 3-4 year term, accompanied by a small drop-off in the overall dominance of the 1-2 year term. This could suggest that some managers are looking to obtain longer-dated facilities at the outset, to avoid repeated amend and extends at least in the early stages of the deployment period.
Pricing in subscription lines year-to-date has averaged approximately 1.85%, showing a tightening when compared to the Q4 2025 average margin of 1.96% for SOFR-linked loans. Given the number of banks participating in the market who are looking to deploy capital in what is now a tried and tested product, we expect margins to remain flat for the remainder of the year or potentially tighten further.
Average Margins in the US Subscription Line Market (SOFR-linked new deals only)
Amend and Extends: Extensions Drive Amendment Activity
Of the 164 completed amendments and joinders we have acted on so far this year, the majority (approximately 61%) featured an extension. This is unsurprising given the typical tenor of a subscription line, which means that necessarily these must be renewed, typically annually.
Interestingly, approximately 39% of all amendments featured a margin decrease, showing that incumbent lenders need to remain price competitive given the relative simplicity of putting in place a new subscription line with a more competitive bank counterparty. We have also seen a significant portion of amendments feature a facility increase or decrease, showing a continued focus by managers (in collaboration with their relationship lenders) on right-sizing their debt facilities over the commitment period. An annual amend and extend process gives a regular opportunity to review quantum and reset the facility to current market pricing.
2025 H1 2026
2025 H1 2026
Conclusion: Outlook for the Second Half of 2026
The first half of 2026 has reinforced the maturity and resilience of the fund finance market. Despite macroeconomic headwinds, our transaction pipeline has remained strong and the fundamentals underpinning the subscription line market in particular continue to look healthy.
The sustained tightening in pricing, coupled with the volume of amendment activity featuring margin decreases, underscores the competitive dynamics at play among lenders.
NAV facilities continue their gradual but steady adoption, and we expect this trajectory to hold as managers become increasingly comfortable with the product and lenders refine their approach to structuring and underwriting these facilities. Meanwhile, the breadth of bespoke and structured financings we are seeing outside of the traditional subscription line and NAV categories speaks to the ongoing innovation and sophistication within the market.
Looking ahead to the second half of 2026, we anticipate that activity levels will remain robust. The key variables to watch will be developments in the global macro-economic environment and their potential impact on broader market sentiment, as well as the interest rate environment and its influence on both pricing and demand.
We look forward to reporting on these developments in our full-year edition of FUNDed.
For more information, please contact one of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
Robin Gibb
+1 345 814 5569
robin.gibb@maples.com
Matthew St-Amour
+1 345 814 4468
matthew.st-amour@maples.com
European Fund Finance Market Update:
H1 2026 Trends, Data and
Outlook
European Fund Finance Market: H1 2026 at a Glance
Following a strong 2025 for the European fund finance market, 2026 appears, to date, to be following a similar trend. While geopolitical and global economic uncertainty might have been expected to have a more pronounced impact, subscription line deals have shown only a relative slowdown in the second quarter after a
strong first quarter. This has been offset by an increase in activity on the NAV facility front. The trend observed last year towards more borrower-friendly terms appears to have stalled, with the market increasingly settling on broadly accepted market standards.
Julia Cornett
Vanessa Lawlor
Arnaud Arrecgros
Subscriptionvs.NAVFacilities
Since the beginning of 2026, subscription facilities have represented a larger share (60%) of new deal volumes extended to Luxembourg, Irish and Cayman Islands vehicles compared to 2025, while NAV deals have slowed slightly to 28% (against 33% in 2025) — of which 83% were extended to Luxembourg vehicles — with the balance (12%) comprising other types of deals (hybrids, for the most part).
BreakdownofClosedTransactionsH12026
The European fund finance market remains dominated by traditional bank lenders, which accounted for 88% of the new deals extended. To date, the total committed deal value across all types of financing arrangements has exceeded US$2,061 billion. Interestingly, most of the financing arrangements our European offices worked on originated in the UK (59%), followed by the US (37%), with the remaining balance coming from other European jurisdictions. On amendments, the US led with 54% against 42% for the UK.
Origination of Financing H1 2026
Subscription Facility Trends: Q1
vs Q2 2026
Activity in the subscription market was more intense in the first quarter, accounting for 62% of the new financing arrangements our European teams worked on. A slight slowdown was observed during the second quarter, particularly at the start, which is again consistent with what we observed in the first half of 2025.
Subscription Line; Deal Volume and Timing
As observed last year, deals were predominantly committed and extended by a single lender (85% of cases). Most new deals (78%) included increase and accordion features. The majority were structured as revolving facilities (76%), with term loans featuring in only 22%.
Q1 Q2 Q3 Q4
2026
The most popular tenors across all subscription deals our European teams worked on remain the shorter ones, in the range of less than 1 year and 1 to 2 years (78% combined), followed by 2 to 3 years, 3 to 4 years and 4 to 5 years (7% each), consistent with 2025. We will see whether this is confirmed over the coming two quarters.
A steady flow of amendments, accessions and extensions has kept our European teams busy over the period. For amendments, 83% consisted of the accession of new credit parties to the financing arrangements, whereas new lender joinders were rarely seen (5%). The trend appears to be towards margin decreases (37%), extensions (37%) and increases in facility amounts (37%), while decreases accounted for only 11%.
NAV Facility Trends: Q2 2026 Surge in European Deals
Unlike the subscription market, the second quarter saw more NAV deals than the first, with 67% of deals closing during Q2, a significant divergence between the two main facility types.
NAVs; Deal Volume and Timing
On maturity, short tenors (1 to 2 years) remain the most popular for NAV deals, representing 57% of the deals our European teams have seen, followed by a much longer maturity (over 5 years) for the remaining 43%.
On the amendment front, the trend is towards extensions (75%), increases in facility size (50%) and margin decreases (25%).
European Fund Finance H1 2026 Key Takeaways
Luxembourg features in around 68% of the new European deals our offices worked on, with Cayman Islands vehicles following at approximately 19% and Irish vehicles at approximately 13%.
On amendments, extensions and accessions, Luxembourg still leads at approximately 76%, followed by Cayman Islands vehicles (21%) and Irish vehicles (3%).
This reflects, once again, Luxembourg's prevailing position as a primary fund domicile, alongside the ongoing prevalence of Cayman Islands structures in sponsor platforms and their financing structures active in Europe. The Cayman Islands, Luxembourg and Ireland continue to be popular jurisdictions for both funds and their downstream vehicles.
Halfway through 2026, the sustained high incidence of amendments and extensions across all types of existing financing arrangements demonstrates that parties continue to take advantage of the flexibility built into standard financing arrangement terms, preferring to maintain and continue using existing arrangements rather than refinance with new ones. We can also observe a trend towards the consolidation of existing relationships between borrowers and lenders.
By the end of 2026, it will be interesting to see whether NAV facilities confirm their increased activity level and reach another record in the European market.
For more information, please contact one of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
Arnaud Arrecgros
+352 28 55 12 41 arnaud.arrecgros@maples.com
Julia Cornett
+44 20 7466 1610 julia.cornett@maples.com
Vanessa Lawlor
+353 1 619 7005 vanessa.lawlor@maples.com
Subscription Lines, NAV Facilities and Regional Deal Flow: Key Takeaways from the First Half of 2026
Michael Leung
Lorraine Pao
Key Figures at a Glance
Asia's fund finance market continued to mature and diversify in the first half of 2026. New transactions completed by June 2026 represented a total deal value of approximately USD 1.64 billion, with newmoney volumes increasing by approximately 20% year-on-year. Subscription lines remained the dominant product, accounting for roughly half of all new transactions. Amendment and joinder activity also recorded a 20% increase in deal volume compared with the same period in 2025. The market remains predominantly bank-led.
Product Mix: How the Market Is Diversifying
Subscription lines continued to lead the market, comprising approximately 50% of new transactions in the first half of 2026. NAV facilities accounted for around 17%, with other products (including management fee facilities) representing the remaining 33%. This reflects a further broadening of the product mix compared with 2025, when subscription lines accounted for roughly 72% of new activity, NAV facilities approximately 14%, and other categories saw only limited uptake. While NAV activity remained broadly steady year-on-year, the overall market has become noticeably more diversified.
Project Mix for H1 2026 Sub-line NAVs Others
Subscription Line Facilities: Deal Flow, Tenor and Pricing
Subscription lines recorded a steady flow of new transactions in the first half of 2026, with a similar number of new deals completed relative to the corresponding period in 2025. Amendment and joinder activity increased by 25% year-on-year, underscoring the continued relevance of subscription lines as the market's foundational product.
Tenor for new subscription line transactions was evenly distributed across the 1–2 year, 2–3 year, and 3–4 year buckets, each representing approximately one-third of new deals. This marks a notable shift from H1 2025, when all new subscription line transactions fell within the 3–4 year tenor bucket.
Lender Landscape: Banks Remain Dominant
Traditional banks continued to dominate the lender landscape in Asia during the first half of 2026, accounting for the vast majority of new deal activity. The market remains anchored by established lending relationships, reinforcing Asia's distinct structural profile relative to the more diversified lender base seen in Western markets.
Outlook for H2 2026
Core Asia markets are expected to remain resilient, with Hong Kong and Singapore continuing to anchor regional activity in the second half of 2026. Subscription lines are likely to retain market leadership, while the broadening product mix signals a market deepening in sophistication. Pricing compression and narrowing commitment fee ranges point to an increasingly efficient and competitive environment. A continued preference for committed facilities with flexible structures is anticipated, alongside a sustained amend-and-extend pipeline.
For more information, please contact one of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
Lorraine Pao
+852 9842 1096 lorraine.pao@maples.com
Michael Leung
+852 5506 0690 michael.leung@maples.com
Ireland's New AIF Rulebook:
Key Changes for Fund Finance
On 5 May 2026, the Central Bank of Ireland ("CBI") finalised its comprehensive updates and enhancements to Ireland’s regulatory framework for alternative investment funds ("AIFs"), including removing restrictions on thirdparty guarantees and aligning Irish rules with AIFMD 2.0.
Here's what fund finance practitioners need to know.
Sarah Francis Vanessa Lawlor
Alma O'Sullivan
AIFMD 2.0
The reforms coincide with the publication of the Irish statutory instrument1 implementing AIFMD 2.0, which came into effect on 1 May 2026.
The CBI's reforms are designed to align the Irish domestic regulatory framework with AIFMD 2.0, but also to adopt recommendations from industry and government, and to ensure consistency with broader EU policy initiatives such as the Savings and Investment Union.
The revised AIF Rulebook represents a significant modernisation, simplification and clarification of the Irish rules governing Qualifying Investor AIFs ("QIAIFs"), Retail Investor AIFs and European Long-Term Investment Funds (ELTIFs).
The key changes from a fund finance perspective are summarised in this article.
Removal of Restrictions on Third-Party Guarantees
The major enhancement for fund financing confirmed in the new rules is the removal of certain restrictions on the ability of QIAIFs to provide guarantees for thirdparty obligations and to support financing arrangements beyond their own assets.
Under the previous AIF Rulebook, QIAIFs were limited in giving guarantees or providing security for the obligations of any third party other than their whollyowned subsidiaries, except in certain circumstances where the QIAIF had an economic interest in the borrower. This meant, for example, that in subscription line transactions where an Irish feeder fund or the ultimate borrower fund was required to provide security or a guarantee to a lender, a cascading security structure had to be used: the Irish fund provided security for its own direct obligations, with the right to that security then assigned down the chain to the lender.
The removal of this restriction enables more efficient cross-entity and group arrangements in line with international fund finance structures, where guarantees and cross-collateralisation across fund groups are commonplace.
It will now be more straightforward for fund managers to put in place financing arrangements within fund groups, including those involving multiple layers of financing across different vehicles (for example, by having a QIAIF guarantee borrowings incurred at the level of a direct or indirect master fund, an intermediate or aggregator vehicle or parallel fund).
Direct Lending Funds
The CBI has removed its legacy domestic regime for loan-originating QIAIFs and will align instead with the corresponding loan origination framework under AIFMD 2.0.
This now ensures that Ireland is on a level regulatory playing field with other leading EU domiciles of direct lending funds, and that both EU and non-EU managers and sponsors will be able to avail of a broader range of private credit strategies using both the ICAV and ILP vehicles.
Greater Structuring Flexibility for Private Funds
The AIF Rulebook now incorporates industry practice and guidance and expressly provides for a variety of features commonly used by private funds such as private equity and venture capital funds. These include capital commitments, side letters, differentiated investor participation (including excuse and exclude rights) and management participation for carried interest purposes.
Use of Intermediate Investment Vehicles
The CBI has removed its prescriptive rules on whollyowned subsidiaries of QIAIFs. The revised AIF Rulebook now provides that where a QIAIF invests through intermediate investment vehicles (including SPVs, aggregators, subsidiaries or co-investment vehicles), prospectus disclosure should be made regarding the use of such vehicles. The CBI expects appropriate due diligence by the AIFM prior to investment and that the AIFM has documented policies and procedures in place for active monitoring (in line with AIFMD requirements).
When Do the New Rules Take Effect?
The updated AIF Rulebook is effective immediately. New financing arrangements, or existing arrangements being renegotiated, can now take advantage of the greater flexibility.
Key Takeaways
• QIAIFs can now provide third-party guarantees and cross-collateralisation, enabling more efficient fund group financing structures.
• Ireland's loan origination framework now aligns with AIFMD 2.0, placing it on a level playing field with other leading EU jurisdictions.
• The AIF Rulebook expressly accommodates common private fund features such as capital commitments, side letters and carried interest arrangements.
These reforms help ensure Ireland remains an attractive and competitive jurisdiction for AIF sponsors and investors by aligning Irish arrangements with international fund finance market practice.
For more information, please contact one of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
Ireland Transposes CRD VI and Article 21c – Third Country Branch Requirement
The statutory instrument transposing the Capital Requirements Directive (EU) 2024/1619 ("CRD VI") into Irish law was published on 14 July 2026, with effect from 10 July 2026. Among the most significant changes introduced by CRD VI is the requirement for certain third-country entities carrying out "core banking" activities in a Member State to establish an authorised branch in that Member State (the "Third-Country Branch Requirement").
This requirement is of particular relevance to fund finance, given the prevalence of third-country lenders providing subscription line, NAV and other credit facilities to Irish fund vehicles. Importantly, however, the ThirdCountry Branch Requirement does not apply to entities whose business activities would not bring them within the scope of a CRD credit institution within the EU. For many lenders, CRD VI may have no impact on their existing operations, and where it does, a range of exemptions and structuring solutions are available.
Ireland's established, innovative and pragmatic financial services community is well positioned to navigate these new requirements. The Maples Group's global network and strategic focus on the core finance and investment fund centres give us a unique perspective on both the challenges and the opportunities that CRD VI and Article 21c present for fund financing and the global credit markets that serve it.
We are well placed to advise on, implement and support the licensing and structuring solutions that lenders and fund sponsors may require.
Read our full client update on the CRD VI Irish Transposition.
Cayman Islands Tokenised Fund Legislation: What It
Means for Subscription Finance
The Cayman Islands has reinforced its position as the premier offshore jurisdiction for tokenised investment funds with the introduction of landmark legislation earlier this year: the Private Funds (Amendment) Act, 2026 and the Mutual Funds (Amendment) Act, 2026.
Together, these Acts establish a bespoke, purpose-built legislative framework for tokenised funds (leading the way among major offshore fund domiciles) and carry significant positive implications for funds seeking to enter into financing arrangements secured over their right to call capital from investors.
Lucy Sleep
Tina Meigh
Tokenised Funds Under Cayman Islands Law
The new legislation amends the Private Funds Act (2025 Revision) and the Mutual Funds Act (2025 Revision) respectively to introduce dedicated definitions and requirements for tokenised funds. A "tokenised private fund" is defined as a private fund that has any of its investment interests represented by "digital investment tokens," being a digital representation of the whole of an investment interest held by an investor in a private fund. The equivalent concept for open-ended structures, the "tokenised mutual fund," is a mutual fund that has any of its equity interests represented by "digital equity tokens," defined as a digital representation of the whole of an equity interest held by an investor in a mutual fund.
This clarity of definition is of fundamental importance for funds seeking debt financing. The essential characteristic of subscription credit facilities is the lender's ability to take security over the fund's right to call and receive capital contributions from its investors. The legal characterisation of the investor's interest (and the medium through which it is evidenced and transferred) is central to any lender's credit analysis and security package.
By recognising tokenised investment interests at the statutory level, the Cayman Islands has removed the threshold uncertainty that continues to hamper tokenised fund financings in other jurisdictions. Whereas academic commentary¹ has highlighted that "the lack of legal clarity remains among the most cited concerns regarding tokenisation", the Cayman Islands has addressed this head-on with primary legislation.
Lender Due Diligence for Tokenised Funds in the Cayman Islands
A tokenised private fund applying for registration must obtain and securely maintain all records relating to the issuance, creation, sale, transfer and ownership of an investment interest represented by a digital investment token and must make these records available to the Cayman Islands Monetary Authority ("CIMA") within such period as may be specified. The operator of the tokenised fund must confirm annually to CIMA that all such records have been properly kept and maintained in compliance with the legislation. The same obligations apply to tokenised mutual funds.
For a lender advancing a subscription facility secured over unfunded capital commitments, the integrity and transparency of the investor register is paramount.
In a traditional fund structure, lenders rely on the general partner's or operator's maintenance of books and records to verify investor commitments and to confirm that capital calls can be directed to the secured account.
The new Cayman Islands legislation mandates a higher standard of record-keeping for tokenised funds, backed by statutory obligations and regulatory oversight, providing lenders with an enhanced level of comfort that the investor register (now maintained on a blockchain-integrated infrastructure) is accurate, up-todate and verifiable.
The immutable, append-only nature of distributed ledger technology means that lenders can benefit from a cryptographically verifiable history of token issuance, transfers and redemptions, reducing the risk of disputes over the composition or accuracy of the investor base.
¹ "Legal Structures of Tokenised Assets," European Journal of Risk Regulation (Cambridge University Press, 2025)
Transfer Restrictions and Lender Security in Tokenised Funds
A critical feature of the new framework from a financing perspective is the statutory requirement that an investment interest represented by a digital investment token (or digital equity token, in the mutual fund context) is only transferable with the approval of the operator of the tokenised fund in accordance with the offering document.
This controlled transferability mechanism is highly advantageous for fund borrowers and their lenders. In a subscription line facility, the lender's security package is underpinned by the creditworthiness and enforceability of uncalled capital commitments from a known and pre-approved group of investors. Unrestricted transfer of interests could dilute the quality of the collateral pool or introduce investors whose commitments are less creditworthy.
The statutory restriction on transfers without operator approval (which in practice will be governed by the terms of the offering document and any side letters or facility documentation) gives both the fund and the lender a robust, legislatively backed mechanism to ensure that the investor base (and therefore the collateral pool) remains stable and of the agreed quality. This is a significant improvement over the position in many onshore jurisdictions, where transfer restrictions are purely contractual and may be subject to challenge.
Cayman Islands Risk Disclosure Requirements for Tokenised Funds
The new Cayman Islands legislation requires that any offering document of a tokenised fund disclose any risks specific to the digital investment tokens (or digital equity tokens), including considerations regarding cybersecurity, the transferability of the token and any other potential risks identified by CIMA. The offering document must further set out how those identified risks are addressed or mitigated for investors.
For a fund borrower, these disclosure requirements serve a dual purpose. First, they compel the fund to articulate and address the technology and operational risks inherent in its tokenised structure at the outset, which in turn strengthens the fund's operational resilience and makes it a more attractive borrower.
Second, the mandated disclosure gives lenders a clear, standardised source of information against which to assess the operational and technological risks of the tokenised collateral structure. Rather than requiring bespoke due diligence on novel technological arrangements on a case-by-case basis, lenders can look to the offering document (prepared under a statutory disclosure standard) as a reliable baseline.
CIMA's Supervisory Role for Tokenised Funds
CIMA is empowered to exercise supervisory powers over tokenised funds to ensure compliance with the legislation and the protection of investor interests, including carrying out inspections of the underlying technology and digital investment token transactions. CIMA may also impose specific restrictions on the characteristics of digital investment tokens and require periodic reporting from tokenised funds.
This proactive regulatory supervision is a distinguishing feature of the Cayman Islands framework. For institutional lenders, the knowledge that a tokenised fund's blockchain infrastructure and token transactions are subject to supervisory inspection by a wellregarded financial services regulator provides a level of institutional assurance that is not readily available in other offshore or, indeed, many onshore jurisdictions.
Lenders can take comfort that the technology underpinning their collateral (including the smart contracts governing token issuance, transfer and record-keeping) is subject to ongoing regulatory scrutiny.
Key Takeaways: Tokenised Fund Finance in the Cayman Islands
For tokenised funds domiciled in the Cayman Islands that wish to enter into subscription credit facilities or other capital call-backed financings, the new legislation provides several practical advantages:
• The fund borrower can point to a clear statutory basis for the legal characterisation of its tokenised investor interests, simplifying the lender's legal due diligence and reducing the need for extensive legal opinions on novel points of law.
• The statutory requirement for operator-approved transfers gives the fund and its lender an enforceable gating mechanism over changes to the investor base, directly supporting the integrity of the collateral pool.
• The legislatively mandated record-keeping obligations, backed by annual confirmation to CIMA, provide lenders with a higher standard of assurance over the accuracy of the investor register than is typically available in non-tokenised fund structures.
• The blockchain-integrated register offers the potential for real-time supervisory access, programmable automation of compliance checks and an immutable audit trail (capabilities that can enhance the lender's monitoring of the collateral).
• Moreover, the possibility of establishing smart contracts to automate enforcement upon the occurrence of specified events (such as an event of default under a facility agreement) is a feature of tokenised structures that has been recognised as a significant potential advantage for secured lenders².
TheCaymanIslands:Jurisdiction ofChoiceforTokenised Fund
Finance
The Cayman Islands' new tokenised fund legislation represents a deliberate and sophisticated response to the needs of the modern funds industry. By providing statutory clarity, mandating robust record-keeping, requiring controlled transferability, imposing comprehensive risk disclosure obligations and empowering CIMA with technology-specific supervisory powers, the Cayman Islands has created a legislative environment that is not merely accommodating of tokenised funds, but actively supportive of the financing structures upon which those funds rely. The Cayman Islands' depth of service providers, including expert professional independent directors from the Maples Group, can also support wider adoption of tokenised funds, dealing with key questions around governance in terms of investor fairness and arbitrage risks for managers. These issues are considered in our recent article: Tokenisation: A Force Multiplier for Investment Funds
For fund sponsors, operators and their lending counterparties, the message is clear: the Cayman Islands is open for tokenised business and leading the way
For more information, please contact one of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
TinaMeigh
+1 345 814 5242
tina.meigh@maples.com
LucySleep
+1 345 814 5224
lucy.sleep@maples.com
Taking security over cryptoassets (PLC article, 2019)
GP Structuring in Cayman Islands Fund Formation: What Sponsors Need to Know About Fund Finance
Audrey Rankin
Micaela Wing
Why GP Structuring Matters for Fund Finance
The structure of a general partner ("GP") entity is a critical decision in fund formation. Although GP structuring is often driven by tax, regulatory and governance considerations, it also carries significant fund finance implications that are too often considered only at the financing stage rather than at the outset. Lenders scrutinise GP structures when underwriting fund finance facilities. Sponsors that address financing issues early can unlock greater borrowing flexibility, mitigate the risk of adverse lender terms and avoid costly mid-cycle amendments or restructurings.
This article examines how GP entity choices affect borrowing capacity, security structures, lender diligence and overall fund finance execution, drawing on current market data and structuring trends across the Cayman Islands fund formation landscape.
The Role of the GP in Cayman Islands Fund Structures
A Cayman Islands exempted limited partnership ("ELP") does not have a separate legal personality. It acts through its GP, which enters into all agreements on behalf of the partnership. ELP assets, including choses in action and capital call proceeds, are held on trust by the GP in accordance with the partnership agreement. This trust characterisation has direct financing consequences: lenders must ensure that security is granted by or through the GP in its capacity as general partner, and that the GP has authority under the partnership agreement to pledge or encumber those assets.
In a typical private equity, real estate or credit fund, the GP manages the partnership, calls capital from limited partners ("LPs"), and enters into financing arrangements on behalf of the fund. Lenders will confirm that the GP has authority under the partnership agreement and its own constitutional documents to incur debt, pledge collateral and grant security interests - including over unfunded capital commitments.
An ELP requires a qualifying GP - a Cayman Islands company or partnership, or a foreign entity registered in the Cayman Islands. In 2025, the most frequently used GP vehicles were Delaware (44%) and Cayman Islands (43%) entities. Entity type and jurisdiction can affect liability insulation, tax treatment, legal opinions and the perfection and enforcement of security interests.
Critically, the GP bears unlimited liability for the ELP's debts and obligations where the ELP's assets are insufficient to satisfy them. LPs, by contrast, enjoy limited liability provided they do not participate in conducting the ELP's business.
Single-Purpose GP Entities and Bankruptcy Remoteness: Lender Preference¹
Many fund finance lenders prefer the GP to be a singlepurpose entity whose activities are limited to serving as the fund's general partner. A dedicated GP reduces the risk that unrelated liabilities will interfere with fund operations or impair the lender's collateral. Such entities may be restricted from incurring unrelated debt, holding non-fund assets, or merging with other entities. In some cases lenders require independent managers or directors to approve bankruptcy or insolvency filings, or other material actions stipulated by the lender, so as to achieve bankruptcy remoteness.
Sponsors sometimes prefer to use one GP across multiple funds or to combine management company and GP functions. While administratively efficient, this approach may expose the GP to liabilities from other vehicles, making lenders less comfortable with the credit profile and potentially limiting borrowing capacity. Dedicated GP entities for each fund often provide greater financing flexibility, although a sponsor's track record, established structuring preferences and existing lender relationships can often overcome initial concerns.
GP-Level Financings, NAV Facilities and Carried Interest
GP-level financing has become increasingly significant in fund finance. GP commitment facilities, management company credit lines and NAV-based facilities secured by GP economics are now important tools for sponsors managing liquidity, funding GP commitments and financing strategic initiatives.
A lender providing a GP commitment facility will review the GP's constitutional documents to confirm its authority to borrow and pledge its interests, and will assess the structural subordination of the GP's claims relative to the fund's LPs and other creditors. In a NAV facility secured by carried interest, lenders will focus on distribution timing and priority, clawback obligations and pledge enforceability. These transactions demand close coordination among fund formation, fund finance and lender counsel. Intercreditor arrangements may be necessary where both fund-level and GP-level facilities are in place, to delineate payment priority, establish standstill periods and govern enforcement rights so that neither lender’s recovery actions inadvertently impair the other’s collateral position.
GP Capital Commitments and Borrowing Base Considerations
The GP or its affiliates typically make a capital commitment alongside LPs. This "GP commitment" signals alignment and may be directly relevant to a subscription facility borrowing base. Depending on the GP's credit profile and funding source, lenders may include the GP commitment in the borrowing base, apply a lower advance rate or exclude it altogether. Where the GP commitment is financed through a fee waiver, management company loan or separate facility, lenders will examine those arrangements and any related subordination or structural priority issues to ensure the GP’s obligation to fund its commitment remains enforceable and unencumbered, and that repayment of any GP-level borrowing does not create a priority claim that could dilute or subordinate the subscription facility lender’s position in the waterfall.
GP Removal, Key Person Events and Lender Protections
Partnership agreements usually address GP removal, replacement and key person events (where the key person is appointed at the GP level). These provisions matter to lenders because they can directly affect underwriting assumptions, the enforceability of financing documents - particularly where security or guarantees are granted by the GP and a replacement GP has not acceded to those obligations - and LP willingness to fund capital calls, given that commitment obligations may be suspended upon a key person event. Credit agreements commonly include notice requirements, covenants or defaults tied to such events. Sponsors should ensure the partnership agreement and credit agreement are aligned on notice periods, consent rights and the consequences of GP removal or key person triggers.
Under section 10(2) of the Exempted Limited Partnership Act (As Revised) (the "ELP Act"), a statement regarding any arrangement to remove, replace or admit a GP must be filed with the Registrar of Exempted Limited Partnerships; absent such filing, the arrangement is not effective. This is one of the few instances under Cayman Islands law where filing is a condition precedent to effectiveness. The filing must also be made within 15 days to avoid penalty fees. This requirement can affect a lender's ability to replace a GP in an enforcement scenario over GP interests in an ELP, as the outgoing GP typically files the section 10 statement. Lender co-operation from the outgoing GP is therefore essential.
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GP Structuring Trends in 2025: Independent Oversight and
GP-Led Secondaries
Several market trends are amplifying the importance of thoughtful GP structuring. Continuation vehicles and GP-led secondaries have placed renewed focus on the GP's economic interests and governance rights. For ELP funds launched in 2025, 42% incorporated some form of independent oversight - often via independent committees or directors at GP level.
The message for sponsors is clear: consider fund finance implications early in the GP structuring process. Doing so at the formation stage enables sponsors to design GP entities that are fit for purpose from both an operational and financing perspective and to avoid costly restructuring down the line.
Key Takeaways
• GP structuring decisions made at fund formation directly affect borrowing capacity, security arrangements and lender terms.
• Lenders prefer single-purpose GP entities with bankruptcy remoteness features to protect collateral.
• GP-level financings, NAV facilities and GP commitment structures require careful coordination between fund formation and fund finance counsel.
• In 2025, Delaware (44%) and Cayman Islands (43%) entities remain the most common GP vehicles for Cayman Islands ELP structured funds.
For more information, please contact any of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
Audrey Rankin
+1 345 814 5346
audrey.rankin@maples.com
Micaela Wing
+1 345 814 5436
micaela.wing@maples.com
Irish Witholding Tax in Fund Finance:
Where is the Source?
William Fogarty
David Burke
Why Irish Withholding Tax Matters in Fund Finance
A non-Irish LP borrows under a facility agreement. No Irish entity is party to the loan. Yet the lender may still face Irish withholding tax ("WHT") on its interest income. Why? Irish WHT applies to interest with an Irish "source" and tax transparency rules can mean the source is Irish even when the borrower is not Irish. This has direct consequences for how fund financing documents are drafted and negotiated.
Ireland is one of Europe’s leading fund jurisdictions. Irish Investment Limited Partnerships ("ILPs") are a
regulated fund structure increasingly attractive to global investors and managers. In direct lending and credit platforms, Irish entities such as ICAVs (corporate regulated investment funds) commonly invest or lend through a limited partnership (a "LP") formed in the Cayman Islands, Jersey or Delaware. It is often essential for these platforms that the LP is transparent — or "look-through" — for Irish tax purposes so that the Irish entity is entitled to the income of the LP for tax treaty purposes.
Ireland imposes WHT on annual interest from an Irish source, directly affecting lending to such structures and the legal documentation surrounding them. Where an ILP is itself the borrower, the application of these rules is relatively straightforward. Where the borrower is a subsidiary LP of an Irish entity, the position is more complex and needs to be considered at the outset.
This article outlines how the Irish WHT rules apply and the practical consequences for fund financing transactions.
The Irish WHT Framework
The Obligation: Irish Source
Where interest has an "Irish source", the payer is obliged to deduct Irish income tax at 20% before paying the lender. This obligation is imposed by section 246(2) of the Taxes Consolidation Act 1997 ("TCA 1997"). Importantly, it can apply even where a borrower is not Irish.
The leading case law establishes that "source" is determined by a multi-factorial test (the key cases being National Bank of Greece and Ardmore Construction). The most important factors are the residence of the debtor, the location of its assets / security and the origin of the funds out of which interest is paid. The test requires an assessment of the underlying commercial reality. If the factors point to Ireland, the interest may have an Irish source.
Where the borrower is an Irish partnership, such as an ILP, the interest will invariably be viewed as having an Irish source. This is relevant for subscription line facilities involving an ILP.
Where a non-Irish LP is the contractual borrower and has an Irish partner, the position becomes more complex. On the basis that the LP is transparent for Irish tax purposes, the Irish partner is treated as the party earning the income and incurring the expenses of the LP including the interest expense. Because the debtor is, in substance, Irish, the interest may be considered to have an Irish source, which means Irish WHT could apply. There will be cases where this does not apply — for example, where the Irish partner holds only a small interest, or where the weight of other factors points away from Ireland — but in our experience the general trend in the market is to assume that Irish WHT is a risk on such structures.
If the interest has an Irish source, the next question is whether any of the statutory exemptions relieve the obligation to withhold.
Exemptions from Irish WHT
Irish WHT arises only on "annual" interest — a taxlaw term that broadly captures interest on any loan or facility capable of remaining outstanding for 12 months or more. Where a subscription line ("sub-line") facility involves short-term lending that will not extend beyond a year, the interest should fall outside this definition, and no Irish WHT should apply. The position becomes more complex where the facility provides for loan extensions beyond 12 months, as it may then be regarded as one capable of bearing annual interest.
The key commercial question is: can the lender receive its interest free of withholding?
Irish law contains a wide array of exemptions from WHT on annual interest. Interest can be paid to any Irish bank, other Irish funds, and other active lending entities. However, if the lender is based outside Ireland, it must fall within one of several exempt categories. The most important is for a lender that is a corporate resident and taxable in an EU jurisdiction, or resident in a jurisdiction with which Ireland has signed a double tax treaty (a "DTA State"). This covers most US and European lending institutions — but lenders based in international fund centres such as Jersey or the Cayman Islands would not qualify.
The Transparent Partnership Issue
Where the borrower is a non-Irish LP with an Irish partner, WHT is a risk that is easily overlooked. As outlined previously, tax transparency means the Irish partner may be treated as the real debtor for Irish tax purposes, potentially resulting in Irish source interest and an Irish WHT obligation.
Due diligence on the lender's status will be required to determine whether it qualifies for an exemption from WHT.
A Section 110 Company is an SPV commonly used in Irish funds and financing structures. Where the Irish partner is a Section 110 Company, interest can be paid gross (without any WHT deduction) to any person — corporate or otherwise — that is resident in an EU jurisdiction or DTA State. Where the Irish partner is a fund, such as an ICAV, similar exemptions should apply. These exemptions are readily understood by international lenders but may not always be front of mind for lenders, counsel or borrowers engaged in routine facility agreements.
Impact on Facility Agreements
This analysis has direct, practical consequences for how credit agreements are drafted and, in particular, for how tax risk is allocated in facility agreements.
The Gross-Up Mechanism in Fund Finance Agreements
In market-standard fund financing agreements, if a borrower is required to withhold tax from an interest payment, it must increase (or "gross up") the payment so that the lender receives the full amount net of the deduction. However, there is typically an exclusion from this gross-up if the lender does not independently qualify for an exemption — that is, if it is not a "qualifying lender".
Under a typical Loan Market Association (LMA) facility agreement, the qualifying lender definition sets out the conditions under which interest can be paid without withholding. If a lender satisfies those conditions, it can certify this to the borrower, who can then pay gross. In US-style facility agreements, the concept of "Excluded Taxes" aims to achieve the same outcome.
Irish WHT Application in Non-Irish LP Structures
The presence of Irish tax language in a facility where the borrower is a non-Irish LP may not seem logical — but where the sole limited partner is an Irish fund or Section 110 Company, inclusion of such provisions is merited for the reasons outlined previously.
As noted, the wide range of Irish exemptions from WHT is intended to accommodate lending from outside the jurisdiction. Once lenders are made aware of the issue, they can take steps to confirm their exempt status, which should resolve the withholding tax concern.
Negotiating WHT Risk
Once the WHT risk has been identified, allocating that risk between the parties frequently involves commercial negotiation. The lender may be prepared to share information confirming that it is resident and taxable in an EU jurisdiction or a DTA State, but may still insist on a full gross-up. This can be justified on the basis that it is lending to a non-Irish partnership — and therefore Irish WHT is not its concern or risk at all.
Borrowers can counter this on the basis that WHT would be a cost for the entire structure — and ultimately the lender — if it arose. In practice, where the lender clearly qualifies for an exemption, the typical outcome is that the lender provides the necessary confirmation
of its status and the borrower accepts a narrower gross-up obligation limited to circumstances where the exemption is lost (for example, due to a change in law).
Key Takeaways
• Irish WHT can arise on interest paid under a facility even where no Irish entity is party to the loan. Where the borrower is a non-Irish LP with an Irish partner, the tax transparency of the LP structure means that the Irish partner is treated as the payer, potentially giving the interest an Irish source.
• A wide range of statutory exemptions exists, and most institutional lenders will qualify — but the issue must be identified and appropriate provisions included in the facility documentation.
• As the fund finance market continues to grow and structures become more complex — with NAV facilities, hybrid facilities and multi-jurisdictional lending groups becoming increasingly common — Irish WHT could arise in unexpected contexts. Early engagement between borrowers, lenders and their advisers on these points as part of the tax structuring will ensure that the risk is properly managed and that fund financing transactions can continue to be executed efficiently.
For more information, please contact any of the contributors or your usual Maples Group contact and we would be delighted to discuss further with you.
William Fogarty
+353 1 619 2730
william.fogarty@maples.com
David Burke
+353 1 619 2779
david.burke@maples.com
Global Expertise
Combining the Maples Group's leading finance and investment funds capability, our Fund Finance team has widespread experience in advising on all aspects of fund finance and related security structures for both lenders and borrowers.
We advise on issues relating to taking security over assets, including shares, limited partnership interests and other forms of securities issued by British Virgin Islands, Cayman Islands, Irish, Jersey and Luxembourg vehicles.
For further information, please speak with your usual Maples Group contact, or the following primary Fund Finance contacts:
BRITISH VIRGIN ISLANDS
Chris Newton +1 284 852 3043 chris.newton@maples.com
CAYMAN ISLANDS
Tina Meigh +1 345 814 5242 tina.meigh@maples.com
Robin Gibb +1 345 814 5569 robin.gibb@maples.com
Anthony Philp +1 345 814 5547 anthony.philp@maples.com
Matthew St-Amour +1 345 814 4468 matthew.st-amour@maples.com
HONG KONG
Lorraine Pao +852 9842 1096 lorraine.pao@maples.com
JERSEY
Mark Crichton +44 1534 671 323 mark.crichton@maples.com
