Private market distributions have slowed meaningfully in recent years, creating cash flow challenges for many investors, particularly those that utilize portfolio distributions to fund capital calls, operating needs, or new allocations. The secondary market has traditionally served as a release valve, but with widening discounts to NAV and other trade-offs to consider, it may not always be the most appropriate liquidity solution.
Net Asset Value (‘NAV’) finance has emerged as a compelling alternative and is gaining traction within the Family Office community as a discreet, tax-efficient, and bespoke portfolio management solution. NAV lending, a loan against private fund investments, provides a flexible, non-dilutive solution for investors to unlock liquidity without selling positions, jeopardizing relationships, or foregoing long-term upside. This paper explores the evolving liquidity landscape, assesses the pros and cons of secondary sales, and outlines the growing relevance of NAV finance to Family Offices.