Greg Hardiman of 17Capital Discusses Growth and Use Cases of Net Asset Value Lending
Mar 12, 2024
auto_awesome
Explore the evolution and benefits of NAV lending in private equity with insights from Greg Hardiman of 17Capital. Discover the growth and applications of NAV financing, flexibility in non-bank investments, fund financing dynamics, efficiency with NAV lending, and updates on bankruptcy cases and corporate stories.
NAV lending provides liquidity and financing against diversified portfolio equity value, catering to private equity buyouts.
Non-bank lenders like 17 Capital offer innovative NAV financing solutions, enhancing operational flexibility for private equity actors.
NAV loans complement subscription facilities, offering growth capital for strategic investments in later fund stages.
Deep dives
Evolution of NAV Lending in Private Equity
NAV lending involves providing funds against the equity value of a diversified portfolio, a departure from traditional single-company lending. 17 Capital's focus on NAV lending for private equity buyouts has a track record dating back to 2008. Initially conceived as a solution for limited partners seeking liquidity beyond the secondary market, NAV lending has grown to encompass private equity funds, management firms, and individual investors.
Flexibility in Non-Bank Financial Companies like 17 Capital
Non-bank financial companies like 17 Capital offer flexible lending structures, ranging from preferred equity to secured loans, enabling tailored solutions for counterparties' needs. The absence of regulatory constraints allows for innovative financing structures that align with the interests of private equity sponsors and investors, enhancing operational flexibility and risk-return profiles.
Positioning of NAV Loans in Private Equity Fund Lifecycle
NAV loans complement subscription financing in the early stages of fund life, providing continued growth capital for follow-on investments as the fund matures. Unlike subscription facilities backed by LP commitments, NAV loans come into play towards the fund's later investment period, facilitating strategic portfolio investments without undue pressure to divest or inject more equity.
Utilization of NAV Finance in Various Market Environments
The utility of NAV financing extends beyond liquidity acceleration to nurturing portfolio growth opportunities amidst varied market cycles. NAV loans can stabilize stressed assets depending on their fundamental value, while aligning with the evolving trend of longer hold periods in private equity. Adoption of NAV finance is expected to persist, with its utilization evolving as market conditions shift.
Current Development Highlights and Future Trends in Restructuring and Finance
Several significant developments include trials involving Puerto Rico Electric Power Authority, Westgo and Core, and a proposed chapter 15 recognition for Three Arrows Fund Limited. Concerns over creditors' rights and payment priorities in Puerto Rico's plan of adjustment, coupled with ongoing litigation, underscore the complexities in restructuring mandates. Further insights are anticipated this week, reflecting the dynamic landscape of finance and restructuring.
This week, Seth Brumby, deputy managing editor at Reorg joins Greg Hardiman, a managing director at 17Capital, for a discussion about the growth and use cases for net asset value, or NAV lending. Seth and Greg discuss the evolution of NAV lending, its relationship to other forms of fund financing and how it can improve overall private equity realizations.
If you are not a Reorg subscriber, request access here: go.reorg-research.com/Podcast-Trial
We're looking for feedback to improve the podcast experience! Please share your thoughts here: www.research.net/r/Reorg_podcast_survey
For more information on our latest events and webinars: reorg.com/resources/events-and-webinars/
Sign up to our weekly newsletter Reorg on the Record: reorg.com/resources/reorg-on-the-record/
#leveragedfinance #highyield #restructuring #performingcredit #distresseddebt #debtrestructuring #leveragedloans
Get the Snipd podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share & Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode