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Cloud 9fin
How funds are NAVigating the M&A lull
Nov 6, 2024
Peter Benson, a private credit reporter at 9fin, dives into the intricacies of NAV loan structures during a challenging M&A environment. He discusses the shift toward NAV lending as a flexible liquidity solution amid low deal activity. Expect insights on how NAV loans compare to traditional financing methods and the evolving role of private credit firms in this landscape. Benson also highlights the implications of Federal Reserve policies on future M&A activity and the structural challenges private equity sponsors face in adapting to current financial realities.
11:09
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Quick takeaways
- With high interest rates limiting M&A activity, borrowers increasingly rely on flexible NAV lending structures to maintain liquidity.
- The evolving landscape of private credit highlights the shift towards competitive NAV loan terms, appealing to borrowers seeking reduced recourse financing.
Deep dives
Understanding NAV Lending
NAV lending is characterized as a loan against an existing portfolio of assets, contrasting with subscription lines that rely on future capital commitments. In current market conditions, borrowers are increasingly turning to NAV loans, seeking more flexibility amid a lack of mergers and acquisitions driven by high interest rates. Traditionally provided by banks, NAV loans are becoming prevalent in private credit due to their more flexible and creative terms. This shift allows borrowers to maintain liquidity and navigate challenging market scenarios without the constraints usually associated with more conventional funding options.
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Listen to the best highlights from the podcasts you love and dive into the full episode