NAV Facilities: A Strategic Tool

While traditional subscription line facilities are still used in the fund finance market, certain types of fund finance products such as net asset value (NAV) financings have emerged in recent years in Luxembourg and the Netherlands following on from the US markets.

NAV facilities were traditionally used by debt and secondary funds given their relative liquidity but are now frequently used by investment funds investing in all asset class types. These facilities allow them to borrow based on the value of their portfolio investments, providing them with flexible and efficient access to additional capital. NAV facilities may be used in various situations. Particularly when the undrawn investors' commitments are low or the fund investment period has ended and the fund seeks liquidity for investor distributions or add-on investments or, to provide additional liquidity for their distressed portfolio companies. For continuation funds, NAV facilities are used to finance