Friction Points to Fuel Points: How Solving Fund Finance Inefficiencies Can Unlock Private Markets Growth

Fund finance is having a consequential moment. Private Funds CFO’s latest survey finds that general partners are grappling with persistent operational friction, from onerous information requirements to the near-impossibility of comparing lender term sheets on a like-for-like basis. These are not minor irritants; they slow capital deployment, erode GP bandwidth and represent a structural drag on private markets. In Ireland, where over 9,200 funds hold net assets exceeding €5.4 trillion and more than 1,000 managers from over 50 countries administer assets, fund finance efficiency has become a boardroom priority.

The survey deserves commendation for naming what practitioners have long known: the fund finance market remains operationally immature. Dynamics are shifting in sponsors’ favour. Lender competition is intensifying, pricing is compressing and product innovation is accelerating. The opportunity turns on three improvements: standardising information requirements, improving term sheet comparability and capitalising on a more competitive lending environment.

The friction over information requirements reflects a market running on bespoke rather than standardised protocols, imposing real costs on GP finance teams. Haynes Boone’s Fund Finance Annual Report found that 44% of market participants describe conditions as borrower-favourable, a sharp reversal from the prior year when 62% called it lender-favourable. With subscription line pricing compressing — 54% of respondents report pricing below 220 basis points above SOFR, versus just 7% the year before — GPs command more leverage to drive improvements than at any recent point.

Term sheet comparability is equally solvable, and industry bodies are moving. The Institutional Limited Partners Association released NAV financing guidelines in 2024 gaining traction as market standard. For GPs in Ireland, where the Central Bank’s updated AIF Rulebook has removed historic barriers to flexible financing ahead of AIFMD 2.0 in April 2026, there is a first-mover advantage for firms aligning early with best practice.

Three concrete actions can accelerate progress. GPs should establish a standardised data room to reduce per-lender information costs. Finance teams should adopt a common term sheet framework drawn from ILPA guidance to make lender comparisons rigorous. Boards should broaden their panels to include non-bank providers, which the Fund Finance Association’s 2025 symposium identified as willing to offer bespoke, cost-competitive structures that banks historically declined.

The Private Funds CFO survey captures an industry at an inflection point. Friction in fund finance is real, but so is the momentum behind its resolution. A more competitive lender landscape and converging documentation standards are creating conditions for a materially more efficient global market. For Ireland, with its deep fund infrastructure, regulatory modernisation under way and over 65 Investment Limited Partnerships now operational, the timing is propitious. Firms treating fund finance process improvement as a strategic initiative will secure a durable competitive edge as private markets continue to scale.

(The views expressed by the writer are his/her own and do not necessarily reflect the views or positions of BusinessRiver.)