NAV Financing
Last updated 17 July 2026
NAV financing is a loan secured against the net asset value of an investment portfolio, most often a portfolio of private equity fund interests, used to raise cash without selling the underlying holdings. Instead of lending against a single asset, the lender takes security over a pool of fund positions and the distributions they will generate, and advances a portion of the portfolio's current value. Loan-to-value ratios are typically conservative, reflecting the fact that the collateral is illiquid and its value is estimated quarterly rather than priced daily.
Why it matters for family offices
As private markets allocations have grown larger and stay locked up longer, families increasingly face a familiar squeeze: substantial wealth on paper, limited cash on hand. NAV financing offers a middle path between waiting for distributions and selling fund positions in the secondary market, where a sale can mean accepting a discount to reported value and giving up future upside. Families use it to fund new commitments, meet capital calls, or finance opportunities and family needs while keeping long-term positions intact. It is still leverage against illiquid, estimate-based collateral: if valuations fall, covenants can tighten, and the cost of the facility has to be weighed against the value of what it protects.
How it shows up in practice
Consider a family office with $60 million spread across a dozen private equity funds, $8 million of unfunded commitments likely to be called over the next two years, and an attractive direct investment on the table. Rather than selling two fund positions as secondaries, the office arranges a NAV facility against the portfolio. Getting it done depends on data: the lender will want current NAVs, the full schedule of commitments and unfunded amounts, and the distribution history of each fund. After drawdown, the office must monitor loan-to-value as quarterly marks move. Offices that keep clean, current records of every position's value and cash flows are in a far stronger negotiating position than those assembling the picture from scattered statements.
Related terms
Net Asset Value (NAV)
The value of an entity's or fund's assets minus its liabilities, representing what the holding is worth at a point in time. In private markets, NAVs are reported quarterly by fund managers and arrive with a lag. Family office reporting combines custodial market values with reported NAVs to build a complete picture of wealth.
Liquidity
The ease with which an asset can be converted into cash without significant loss of value. Listed equities and bonds are liquid; private equity, real estate, and collectibles are illiquid. Family offices manage liquidity carefully to fund capital calls, distributions to family members, taxes, and lifestyle spending without forced selling.
Secondaries
The purchase or sale of existing interests in private funds or portfolios, rather than committing to a fund at launch. Secondaries give sellers liquidity from otherwise locked-up positions and offer buyers discounted entry, shorter duration, and visibility into existing holdings. The secondary market has become an important portfolio management tool for family offices with large private markets books.
Unfunded Commitment
The portion of a capital commitment that a fund has not yet called, and which the investor must stand ready to pay on short notice. Across dozens of funds, unfunded commitments add up to a substantial contingent liability that shapes how much cash and liquid assets a family must hold. Monitoring total unfunded exposure in real time is a core private markets reporting requirement.
Private Equity
Investment in companies that are not publicly traded, typically through funds that acquire, improve, and eventually sell businesses. Private equity offers strong long-term return potential in exchange for illiquidity and long holding periods. For family offices, tracking commitments, capital calls, distributions, and valuations across many funds is a significant administrative undertaking.
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