Understanding The Increasing Use Of Holdco NAV Loan Structures

A Joint White Paper by Proskauer and William Blair

While the market for NAV financings—loans to funds supported by the net asset value of their portfolios—grew in 2023 and continues to rapidly evolve, a consensus has developed around what is sometimes referred to as a "Holdco Structure."

The Holdco Structure is an approach used by a variety of borrowers and lenders across asset classes largely because it can address issues that repeatedly arise when negotiating and structuring NAV facilities. In Holdco Structures, the funds themselves are typically not borrowers. Instead, one or more holding companies directly or indirectly below the fund enter into the financing. Private equity NAV financings often go this route because they routinely use holding companies to address tax, regulatory, and other issues.