NAV Loans for Family Offices & Funds

A net asset value loan, or NAV loan, is financing underwritten against an investment portfolio and its expected cash flows. Borrowers can include private equity funds, family offices, investment holding companies, funds of funds, and other professional investment vehicles.

Financely provides two separate paid services: advisory and lender placement for borrowers seeking financing, and dedicated origination channels for institutions seeking additional NAV lending opportunities.

How Does NAV Financing Work?

The borrower seeks credit supported by investments it already owns, directly or through a holding structure. The lender assesses the assets and the arrangements through which their value or cash proceeds can support repayment.

A subscription facility primarily relies on uncalled investor commitments. A NAV facility primarily looks to the investment portfolio. A hybrid facility combines elements of both. The available structure depends on the borrower, fund documents, and lender mandate.

For private equity funds, NAV financing can provide liquidity later in the fund’s life. For family offices, it may support investment activity while retaining long-term holdings. A portfolio composed mainly of liquid securities may be better served by a securities-backed facility; a single operating asset may call for a different financing structure.

What Can the Proceeds Fund?

• Follow-on investments: capital for existing portfolio companies or acquisition opportunities.
• Refinancing: replacement of existing fund-level or holding-company debt.
• Bridge liquidity: funding ahead of an expected disposal or distribution.
• Investment commitments: funding capital calls into underlying funds where permitted.
• Distributions: liquidity for investors, subject to the facility terms and relevant governance requirements.

The request should connect the proposed use of funds to a credible repayment plan. An anticipated exit should be supported by a realistic timetable and a downside case if the sale is delayed.

How Much Can You Borrow Against NAV?

Reported NAV is a starting point, not an approved borrowing base. The lender determines which assets qualify, what value it recognizes, and how much exposure it will accept.

Macfarlanes’ comparison of private equity and private credit NAV facilities explains how eligibility criteria, concentration limits, and loan-to-value or borrowing-base tests affect facility sizing. Those mechanics differ by portfolio strategy.

Hypothetical example, not a lender quote or market-standard advance rate. Assumes no existing debt counted in the facility’s LTV numerator. Portfolio-company debt is already reflected in the starting equity values. Actual availability also depends on commitments, reserves, covenants, and draw conditions.

Keep enterprise value, equity value, and facility-defined NAV separate. Show how each figure is calculated so that existing debt is accounted for correctly rather than omitted or deducted twice.

What NAV Lenders Need to Underwrite

Security Must Provide a Workable Route to Value

The collateral package may include holding-company shares, investment interests, account security, or rights to distributions. It does not necessarily give the NAV lender direct security over each underlying portfolio company’s assets.

Pledge restrictions, transfer provisions, and change-of-control clauses require early review. A holding-company pledge should not be assumed to bypass restrictions on an underlying investment. This analysis of transfer-restricted assets in NAV transactions explains why the answer depends on the documents and relevant legal framework.

Legal counsel should establish what can be pledged, which consents are needed, and what enforcement would permit. Commercial analysis should establish how much value remains after senior claims and realization costs.

Concentrated Portfolios Need a Different Credit Case

A portfolio dominated by one business or a few remaining fund investments requires a focused explanation of those exposures. Prepare current asset-level financials, ownership rights, distribution restrictions, and realistic exit assumptions.

Financely presents the actual concentration and repayment risks to suitable counterparties. We do not assume that a diversified-portfolio structure will fit a concentrated holding.

Compare the Whole Facility, Not Just the Interest Rate

A NAV proposal should be assessed for usable liquidity, ongoing restrictions, and repayment obligations as well as price.

• Economics: reference rate, margin, floors, arrangement fees, commitment fees, external costs, and any prepayment charges.
• Availability: eligible assets, concentration limits, draw conditions, and recalculation frequency.
• Valuation: reporting requirements, challenge rights, and independent valuation procedures.
• Repayment: maturity, amortization, mandatory prepayments, and treatment of disposal proceeds.
• Operating flexibility: permissions for acquisitions, asset sales, distributions, and changes to the portfolio.

Cash sweeps may direct specified receipts toward repayment, reducing cash available for reinvestment or distributions. They are not identical across all NAV facilities. Understand when a sweep applies and how much cash it captures.

Fund Authority and Investor Communication

Review the limited partnership agreement, side letters, borrowing limits, and relevant consent provisions before committing to a structure.

ILPA’s guidance on NAV-based facilities recommends LP advisory committee consent where the fund lacks explicit permission or prior consent. It also recommends LPAC approval for facilities funding investor distributions, regardless of general permission to use NAV financing.

These are industry recommendations, not a substitute for the governing documents or applicable law. Borrowers should explain the purpose, costs, risks, and investor impact of the facility.

How Financely Executes a Borrower Mandate

Borrower engagements are paid advisory mandates. Scope and fees are agreed before execution. Applicants need a budget for advisory work and the external diligence and documentation required by the transaction.

1. Assess the Request

   Review the portfolio, proposed borrower, financing objective, available information, and principal constraints.

2. Develop the Credit Case

   Define the requested amount, use of proceeds, repayment assumptions, proposed support, and key downside scenarios.

3. Prepare and Approach Lenders

   Organize the financing materials and approach counterparties whose mandates fit the portfolio and transaction.

4. Compare Terms and Coordinate Execution

   Manage information requests, assess commercial proposals, and support diligence and closing coordination. Counsel handles definitive legal documentation and security matters.

Documents to Prepare

• Current portfolio schedule, ownership percentages, and valuation dates.
• Group structure showing the proposed borrower and asset-holding entities.
• Financial statements and supporting portfolio information.
• Existing debt, security, guarantees, and material covenant details.
• Fund, shareholder, or investment documents relevant to borrowing and pledges.
• Requested facility amount, currency, tenor, and use of proceeds.
• Cash-flow forecast, expected realizations, and repayment sensitivities.
• Relevant approvals and any known restrictions or disputes.

Financely generally focuses on NAV financing requests of USD 5 million and above. This is our commercial focus, not a universal market minimum. Smaller requests may be better suited to a simpler financing product.

Paid NAV Deal Origination for Institutional Lenders

For banks, private credit funds, and specialist lenders with capital to deploy, Financely builds dedicated origination channels around a defined NAV lending mandate.

The Build Starts With Your Lending Criteria

We define the borrower types, facility sizes, minimum portfolio values, eligible assets, jurisdictions, concentration limits, permitted uses, and exclusions your team wants reflected in intake.

A lender seeking diversified private equity portfolios needs different positioning and qualification questions from one considering family-office holdings or concentrated portfolios.

What Exclusivity Means

The dedicated funnel is built for the purchasing institution. Enquiries generated through that channel follow the agreed routing arrangement rather than being automatically distributed to competing lenders.

The engagement should define exclusivity, information-sharing permissions, handling of out-of-scope enquiries, and the respective responsibilities of Financely and the lender. Borrowers retain their own financing choices.

What We Commit to Deliver

• The lender-specific funnel and related deliverables included in the package.
• Alignment with the written criteria agreed during setup.
• Revision of the initial build where it does not reflect those agreed criteria.
• The specified intake questions, qualification filters, and routing workflow.

Qualification is an intake process, not credit approval. The lender remains responsible for underwriting and approval. Borrower submissions require verification during diligence.

We do not guarantee enquiry volume, eligible borrowers, term sheets, funded loans, or capital deployment. Delivery commitments concern the work and infrastructure specified in the engagement.

Frequently Asked Questions