Robin Smith of Carey Olsen

Careers in Fund Finance: Interview with Robin Smith of Carey Olsen

brickfieldBy brickfield02/01/202212 Minutes

In this first 2022 edition of Fund Finance Voices we go offshore to Jersey with Robin Smith, a partner at Carey Olsen, who acts for both lenders and borrowers on complex financings, refinancing and restructurings, with particular emphasis on fund finance. We asked Robin about the background to his career in law and finance, his team at Carey Olsen, the unique aspects of practicing offshore, and his views on the development of the fund finance industry.

How did you begin your career in law, and what was your journey towards specializing in fund finance?

I probably had a slightly different start to some in that I had an interest in IP and media law early on and trained at a specialist media firm in the West End. That was my first introduction to finance through assisting on film finance transactions. Whilst fairly removed from the private equity industry there are a few common themes in some of those deals including the way in which capital can be committed early on and then drawn in tranches from development financing through to production financing and the way returns are layered between the producers and the investors.  Having grown up in Jersey, when my now grown-up daughter was on the way, we decided to look at options outside of London (working from home definitely wasn’t acceptable in those days!). Once I moved back here, it was clear that the island was a very attractive place to pool capital and domicile private equity funds and I spent several years working bank-side on cross-border transactions, with a good portion being on facilities to alternative investment funds.

What specific aspect or aspects keep you engaged and motivated as a practitioner in the space?

If I were to name one aspect, it would be the people. Whether it is CFOs or counsel on the fund side, lawyers in London or legal / transactional teams in the banks, it is much more satisfying to do business with people who you get on with and I feel that in this industry there are some incredibly bright people but who are also a very personable group. I have always enjoyed the technical aspects and being able to act as the Jersey specialist as an extension of a wider onshore team also appeals.

Fund finance as a concept has developed in scope and sophistication considerably in the last decade. Looking back, what has changed most from your viewpoint?

Sophistication on all sides. As structures have evolved, the products have had to keep up. Fund structures with different jurisdictional sleeves, co-investment arrangements and management structures have increased in complexity and the number of funds using facilities has soared. The FFA has played a key role in bringing the sector community together and that has also served to deepen the understanding of financing options and needs. On the legal side we have developed specialist teams who are familiar with the products and who are better placed to offer solutions when issues crop up.

What areas of fund finance do you think are the most exciting in terms of their future potential?

As the industry has evolved, the market has continued to respond with innovative credit solutions.  Whether it’s more comfort with asset based strategies or multi-year deals, we are seeing client needs on credit get pretty far out.  Although we have maintained discipline on structure, we are more open to more aggressive terms where it makes sense these days.

What future developments do you see that market players should be watching most carefully?

Two areas stand out for me. The first is the deployment of technology which is already happening in fund administration. The application of blockchain technology to administrative processes in private equity structures should enable greater automation and transparency in a way that will also increase efficiency both for lender and borrower. Now, its use is not widespread, but the direction of travel is set.

The second is ESG. I have been banging the drum on ESG for a while and it should now be clear that private equity and fund finance lenders have key roles to play. For me it is simple, the train is not stopping so get on board or be left behind. There are clear business benefits but those do not negate the good that will result from the ESG agenda. Although COP26 may not have achieved everything we hoped for, the attendee list showed the commitment of the finance industry to being harbingers of change. We are running our own internal ESG programme at Carey Olsen with a dual focus: looking for the new business opportunities whilst at the same time making sure that our own operations are properly aligned with ESG metrics.

What makes your team at Carey Olsen unique?

We have always tried to embed an understanding of the bigger picture within the team and encourage them to see our role as lawyers within the context of deal participants who broadly speaking have the same commercial aim i.e. to get the deal over the line. Be technically excellent, but give our clients real practical advice using that technical knowledge.

How is its work different from that of a fund finance practice in say New York or London?

Generally, we are running a smaller piece of a larger deal but running more of them at one time. So we might have a number of very busy onshore firms using the team for a large portion of their deals. This requires an ability to juggle the inevitable competing deadlines and those who succeed tend to be able to quickly move from one transaction to another and back again at short notice. We align ourselves with the service standards of our onshore colleagues but will not necessarily be holding the pen on the main facility or fund documents.  Having said that, often the only or principal security (and related issues) are firmly our responsibility and given the increasingly bespoke nature of fund structures, we spend a considerable amount of time doing legal due diligence and advising on security mechanics.

What is your approach to training and recruitment?

I think that it is fair to say that we have generally not relied too heavily on formal training programmes. Whilst we do our fair share of internal seminars, there is no substitute for experience gained on transactions. We encourage our senior lawyers and partners to always be available to answer questions no matter how small. Moving to chat-based platforms such as MS Teams has encouraged that sort of engagement, however, we are always working to improve in that area. The flexibility of working from home can be very attractive but often we see our junior lawyers preferring to be in the office because of the additional training benefits. On recruitment, notwithstanding the tight market we continue to demand high standards as there is no point in adding resource to a team unless it is useful resource. We are fortunate that Jersey remains a very attractive place to live which helps us to recruit and retain good quality candidates. As a result of the tight market and current workloads staff well-being has to be an area of increased focus for us going forwards as it does for the legal industry generally.

What advice would you give to a younger lawyer looking either to further develop an existing career in fund finance or to change focus towards it? What kind of people are you looking for in your team?

There is a wealth of free resource available. Take time to research and understand the private equity industry as a whole rather than just the fund finance parts. The FFA and its members are incredibly supportive, and you will find that attending events and conferences (COVID permitting!) will help you develop that understanding and should provide the side benefit of improving your interpersonal and networking skills at the same time.

Lawyers moving to Jersey will almost inevitably lack local law knowledge, so we focus on bright individuals who are keen to learn and take an interest in the industry. We are fortunate in that our lawyers do not have to be solely focused on one niche area which means that they can develop into well rounded funds and finance lawyers with us.

Brickfield Recruitment works with leading financial institutions in sourcing the very best fund finance talent. If you are interested in finding out more contact Rory Smith at Brickfield Recruitment on +44 7800 963 594 or at [email protected].