NAV Financing
Definition
NAV financing is a loan to a private equity fund secured against the net asset value of its whole portfolio, rather than against a single company. The fund borrows at the fund level to return cash to investors, support portfolio companies, or fund new deals.
In practice
NAV loans boomed when exits slowed: they let sponsors send money back to investors without selling anything. Supporters call it portfolio-level flexibility; skeptics call it leverage on leverage, and note the dividends it funds are borrowed, not earned.