NAV loans discussions come to the fore

Fund finance is no stranger to the secondaries market, and recent developments suggest participants should keep an eye on how this market evolves.

By Adam Le

There’s been a lot of debate in recent months about the use of NAV loans in the wider private market – a fund finance tool that the secondaries industry has been using for many moons now.

Most recently, affiliate title Private Equity International drew attention to a condition found in some NAV facility documents stipulating that capital distributed to LPs via the use of a NAV facility can be recalled. Though on paper any distribution to LPs can be deemed recallable, for NAV facilities these clauses have the potential to cause major headaches for investors. You can find the full article here.

While such distributions will improve the distribution-to-paid-in ratio of the fund being lent against, this capital could be viewed by LPs as a liability and not as liquidity that can be reallocated elsewhere. In essence, the problem some of these facilities...

Read the full story here on Secondaries Investor.