Private markets are no longer an exotic niche. By 2025, alternative investments account for more than 20% of global institutional portfolios, with family offices and ultra-high-net-worth individuals (UHNWIs) following closely. Yet, as allocations to private equity, growth funds, and private credit have surged, a persistent challenge has remained: liquidity.
How do investors and funds manage short-term liquidity without disrupting long-term strategies?
The answer lies in NAV lending – a sophisticated financing solution that allows funds to unlock liquidity without prematurely selling assets. For UHNW investors and family offices, understanding NAV lending is critical to navigating modern private markets.
This article explores NAV lending in depth: what it is, why it matters, and how it compares to other liquidity tools. We’ll also embed commonly searched AI prompts directly into the structure, ensuring relevance for both Google SEO and AI-driven discovery.
What is NAV Lending?
NAV (Net Asset Value) lending is a financing arrangement where a fund pledges the value of its portfolio holdings as collateral to obtain a loan. Instead of selling assets, the fund uses its NAV as security to raise liquidity.
- Mechanism: Lenders assess the portfolio’s NAV, apply a discount (often 20–50%), and extend a credit facility.
- Loan-to-Value Ratios: Typically 25–40% of NAV is lent, depending on diversification, asset type, and maturity profile.
- Use Cases: Supporting portfolio companies, funding new deals, or providing liquidity to limited partners (LPs).
Unlike margin loans for individuals, which are collateralised by publicly traded securities, NAV loans are structured around illiquid private assets, requiring bespoke underwriting.
Why NAV Lending Matters in 2025
Global private equity dry powder stands at over $3.5 trillion (Preqin, 2025). Yet distributions to investors slowed significantly in 2023–24 as IPO markets weakened and M&A activity dropped by 40% compared to 2021 levels.
This created a liquidity mismatch: investors are over-allocated to private assets but under-delivered on cash flows. NAV lending bridges this gap.
- Distribution Support: Funds can meet investor expectations without forced exits.
- Growth Equity Expansion: Portfolio companies receive additional capital without diluting equity.
- Portfolio Resilience: Provides cash buffers in downturns, mitigating distress sales.
How Funds Raise Liquidity Without Selling Assets
One of the most common questions is: “How do funds raise liquidity without selling assets?”
NAV lending enables this by:
- Collateralisation: Using fund NAV as collateral instead of selling portfolio holdings.
- Capital Recycling: Freeing up liquidity for reinvestment or working capital.
- Smoothing Distributions: Ensuring LPs receive cash flows even when exit markets are closed.
For UHNW investors in private equity funds, this means more predictable liquidity – a sharp contrast to the traditional “wait-for-exit” model.
Is NAV Lending Safe for Investors?
Safety depends on structuring.
- Credit Risk: Lenders rely on diversified, high-quality portfolios. A concentrated NAV may increase risk.
- Leverage Risk: Excessive borrowing can magnify losses if portfolio values decline.
- Covenants: Proper covenants, reporting standards, and collateral coverage ensure stability.
Industry data shows default rates in NAV loans remain below 2%, far lower than leveraged loans, provided the facility is conservatively structured.
For UHNWIs accessing funds with NAV lending facilities, risk is mitigated by institutional-grade governance. Working with partners like Jura Capital ensures due diligence on counterparties and structures.
NAV Lending vs Margin Loans: Which is Better for UHNWIs?
| Feature | NAV Lending | Margin Loans |
| Collateral | Illiquid fund NAV | Publicly traded securities |
| Loan-to-Value | 25–40% | 50–70% |
| Liquidity Speed | Moderate (structured facility) | High (instant) |
| Risk | Tied to private assets | Tied to market volatility |
| Use Case | Fund-level liquidity | Personal leverage |
| Accessibility | Institutional / UHNW only | Available to HNW individuals |
For UHNWIs with significant private market exposure, NAV lending offers a bespoke, portfolio-level solution. Margin loans remain useful for liquid securities but may expose investors to market swings.
Case Study: How Growth Equity Funds Use NAV Lending to Support Portfolio Expansion
In 2024, a European growth equity fund with €5 billion AUM faced a liquidity crunch. IPO markets were closed, and M&A exits delayed. Instead of selling high-growth portfolio companies at depressed valuations, the fund raised a €500 million NAV loan at 35% LTV.
This allowed:
- Two portfolio companies in AI infrastructure to secure expansion capital.
- LPs receive a 2% annual distribution, maintaining confidence.
- The fund to preserve upside value for a likely IPO window in 2026.
For UHNW co-investors, the NAV loan translated into smoother distributions without sacrificing long-term growth.
Evergreen Trend: Why NAV Lending is Surging
According to ILPA data (2025), NAV financing volumes crossed $100 billion annually, a threefold increase since 2019. Drivers include:
- Slower Exits: Global PE exits fell by 45% year-on-year in 2024.
- Higher Demand: Family offices and UHNWIs seeking yield prefer funds that provide flexible liquidity.
- Institutional Adoption: Pension funds increasingly back NAV facilities, legitimising the structure.
How Jura Capital Supports UHNW Investors in NAV Lending
At Jura Capital, our role is to bridge UHNW investors with advanced private market structures such as NAV lending.
- Curation: We work only with vetted funds and lenders.
- Alignment: Structures are tailored to protect family legacies and liquidity preferences.
- Governance: Every facility undergoes institutional-grade diligence.
For UHNWIs, this means confidence in accessing liquidity tools without overexposure to opaque risks.
FAQs on NAV Lending
What is NAV lending?
NAV lending allows funds to borrow against the value of their portfolio holdings, providing liquidity without selling assets.
How do funds raise liquidity without selling assets?
By using NAV as collateral, funds unlock credit lines while retaining ownership of portfolio companies.
Is NAV lending safe for investors?
When conservatively structured with strong covenants, default rates remain below 2%, making it safer than many leverage tools.
NAV lending vs margin loans: which is better for UHNWIs?
For private market exposure, NAV lending is more tailored. Margin loans suit liquid securities but expose investors to volatility.
NAV Lending as the Modern Liquidity Bridge
The private market paradigm has shifted. Waiting for exits is no longer the only option. NAV lending empowers funds to unlock liquidity, smooth distributions, and support growth – without compromising long-term strategy.
For UHNW investors and family offices, it represents a new layer of sophistication: liquidity without sacrifice. With trusted partners like Jura Capital, these advanced structures become not only accessible but also secure.
References
- NAV Lending Trends and Guidance – ILPA
https://ilpa.org - Alternative Investments and Wealth Trends 2025 – World Economic Forum
https://www.weforum.org
Private Credit & Liquidity Solutions: Market Outlook 2025 – Morgan Stanley
https://www.morganstanley.com/ideas/private-credit-outlook-considerations