Net asset value

NAV Facilities Gain Momentum Among Alternatives Funds

Retrieved on: 
Tuesday, February 28, 2023
Professional Services, Finance, Safety, Pitch book, COVID-19, Insurance, Risk, Citco, Net asset value, Investment, Sale, NAV, Security (finance), Financial services, Growth

A NAV facility is most often a loan – extended by banks, insurance companies and specialty private lenders – to an alternative investment fund that is secured by the fund’s investments, which collectively comprise its NAV.

Key Points: 
  • A NAV facility is most often a loan – extended by banks, insurance companies and specialty private lenders – to an alternative investment fund that is secured by the fund’s investments, which collectively comprise its NAV.
  • These investments may consist of private equity, venture capital, infrastructure, credit, real estate or holdings in other investment funds.
  • Unlike leveraged loans, high-yield bonds or residential mortgages, NAV facilities enjoyed favorable credit outcomes during the crisis, with minimal defaults and losses.
  • An alternative use of a NAV loan is when institutional investors seek incremental leverage on their Limited Partnership (LP) holdings in alternative funds.