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Bailey McCann, Opalesque New York:

For hedge fund managers and high net worth individuals, a large percentage of personal wealth can be tied up in fund investments. US Trust, the private wealth management arm of Bank of America, has created a solution that it says can bridge the gap if short-term liquidity is needed. LPs can use their investment portfolio as collateral for a line of credit.

US Trust acts as the arranger for custom loan facilities based on the underlying investment portfolio and desired size of the loan. Typical terms are one to three years. Loans are granted with the approval of the hedge fund managers involved so that all parties understand what happens if a redemption occurs.

"We think the size of our facilities, combined with our customized platform and dedicated infrastructure make us stand out among providers of LP lending," says Kenneth Hollander, a senior vice president and structured credit executive at US Trust in an interview with Opalesque. In order to streamline the process, US Trust has worked with counsel to standardize the documentation needed to extend a line of credit and will work closely with outside counsel to create terms that work for both sides.

"We will work with LPs on custom facilities, depending on the situation," Hollander adds.

LP lending has emerged as a growing area of wealth management. Many of the big banks offer LP lending as a liquidity solution for high net worth individuals and hedge fund managers. Bu......................

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