NAV facilities, explained
Portfolio-backed leverage later in a fund's life — uses, risks and reporting.
What is a NAV facility?
A NAV facility is a loan to a fund secured by the value of its portfolio, typically used after the investment period to fund follow-ons, bridge to exits or make early distributions.
Why GPs use them
To support portfolio companies without calling capital, to bring forward distributions, or to manage a slow exit market.
What LPs worry about
Leverage at the portfolio level adds risk; distributions funded by borrowing can flatter DPI. LPs want to know size, cost, purpose and the effect on returns.
Reporting
Disclose the facility, its use of proceeds and performance with and without it.
Questions
Does a NAV-funded distribution count in DPI?
Arithmetically yes, which is why disclosure matters.
Related reading
NAV facility · Subscription lines of credit: a GP's guide · DPI
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