Equity bridge facilities (or capital call facilities, as they are sometimes referred to) that are provided to private equity funds (funds) and secured by the fund's limited partners' commitments to make capital contributions (LP commitments) are a very specific type of product, but are becoming increasingly popular in the UK loan market. A growing number of banks and financial institutions are now providing these facilities and a market position on some of the issues highlighted in this article is being reached. The form of documentation is also becoming more standardised and established.

This article considers:

• The importance of understanding the fund's structure (often a limited partnership) and the key issues to consider when conducting due diligence on the fund.
• The specific provisions (such as representations, undertakings and events of default) that are included in facility agreements (or loan agreements) for providing equity bridge facilities to funds.
• The security that a lender will take over the general partner's rights to draw down the limited partners' capital contributions to the fund.

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This article first appeared in the July 2011 issue of PLC Magazine.