NAV Financing in Private Equity: Increasing Liquidity, Facilitating Acquisitions, Improving Investment Returns

This webinar will focus on NAV financings to private equity (PE) funds where the value of the portfolio companies comprising the investment assets of the PE fund provide support for the borrower's loan obligations. PE sponsors are increasingly taking advantage of this previously underused area of the fund financing market to help manage liquidity and support fund performance.

NAV credit facilities are often used by PE funds after the fund has matured beyond its investment period, when it has typically exhausted most of its investor capital commitments. After the investment period, funds generally cannot access borrowing availability under a subscription-backed credit facility because they do not have sufficient remaining uncalled capital commitments. With a subscription-backed credit facility unavailable, the fund may turn to a NAV credit facility to provide the liquidity necessary to manage its portfolio and investment activities.

NAV credit facilities allow sponsors to obtain the liquidity necessary to effectively manage the PE fund and maximize its performance. Fund investors can also receive a return on capital without resorting to a sale and foregoing any potential additional upside from holding the investments longer. Lenders can also benefit from the attractive structuring and pricing options that NAV credit facilities present.

Listen as our authoritative panel explains the features and mechanics of NAV credit financing. The panel will also address the advantages and disadvantages of NAV credit facilities for both lenders and borrowers.

1. Overview of NAV credit facilities
2. The rise of NAV financing in the PE market
3. Structure and collateral of NAV facilities
4. Differences between NAV credit facilities and subscription-backed credit facilities
5. Advantages and disadvantages of NAV credit facilities
   • For funds, sponsors, and investors
   • For lenders
6. Business and legal considerations
   • Collateral package
   • Loan to value
   • Cash flow/repayments
   • Minimum assets/diversity in investment portfolio
   • Flexibility
7. Practical considerations and key takeaways

The panel will address these and other key issues:

• What are the market conditions that are prompting the rapid growth in NAV credit facilities?
• Why would PE funds use NAV financing to meet their needs and achieve various objectives?
• What are the business and legal issues and considerations with NAV financings?
• What are the advantages and disadvantages of NAV financing for PE funds, sponsors, investors, and lenders?