NAV Finance 101: The Next Generation of Private Credit
Mar 7, 2024
auto_awesome
Explore the benefits and growth of NAV finance in the private credit landscape, including liquidity enhancement, risk management strategies, and the projected market size of $145 billion by 2030. Learn how NAV finance can create value, manage portfolios efficiently, and play a crucial role in the next generation of private finance.
NAV finance provides non-dilutive capital based on asset value for private equity, aiding liquidity and value creation.
The growth of NAV finance offers strong downside protection and long-term returns, aligning interests for lenders and borrowers.
Deep dives
Overview of Nav Finance
Nav Finance involves private capital solutions based on the net asset value of investment portfolios, offering non-dilutive capital as debt or senior equity. It is tailored for the private equity industry, providing liquidity, value creation, and portfolio management. With growing assets under management in private equity, Nav Finance's adoption has increased, characterized by bespoke loans with common features like senior ranking, collateralized investments, and long maturities.
Attractions and Benefits of Nav Finance
Nav Finance offers potential returns akin to direct lending but with stronger downside protection, linked to private equity industry growth. Lenders benefit from diversified portfolios, robust covenants, and aligned interests with sponsors. These bespoke yet straightforward loans provide liquidity for portfolio managers while maximizing both offensive and defensive strategies, contributing to long-term risk-adjusted returns for investors.
Growth Outlook and Risk Management in Nav Finance
Nav Finance has seen rapid growth, particularly amidst market shifts like the COVID-19 pandemic and changing monetary policies. Deal flow has surged, connecting with private equity funds beyond their investment phases. The sector's growth projection is linked to the expansion of the entire private equity universe, emphasizing risk management through proper underwriting, diverse portfolios, and stringent covenants to mitigate potential losses.
Learn all about NAV finance, a rapidly growing segment of the private credit landscape, in this explainer, which was authored by Armen Panossian (Co-CEO and Head of Performing Credit) and Pierre-Antoine de Selancy (Cofounder and Managing Partner, 17Capital). They discuss the evolution of NAV finance, the benefits for both lenders and borrowers, and the area’s dramatic growth in recent years. They argue that NAV finance is likely to play a crucial role in the next generation of private finance.
You can read NAV Finance 101 here (https://www.oaktreecapital.com/insights/insight-commentary/education/nav-finance-101-the-next-generation-of-private-credit).
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