NAV-Based Financing Facilities

One area of focus for ILPA over the last several years has been NAV-based financing facilities in private equity (PE); ILPA has had numerous conversations on this very topic with Limited Partners (LPs), General Partners (GPs), service providers and lenders. Through forthcoming guidance, ILPA will address several challenges that LPs face, including around education, transparency and legal language.

About the Forthcoming Guidance

Given the highly unique nature of NAV facilities and the broad range of deals they affect or encompass, the forthcoming guidance will provide a shared set of expectations and recommendations for LPs and GPs around the use of NAV facilities in PE and the requisite transparency.

The multi-part publication will feature sections on education for LPs, education for GPs, achieving increased transparency, reporting and diligence questions and navigating legal language.

Again, the ILPA guidance looks to help LPs acquire the transparency and information necessary to determine if their GP is using a NAV facility responsibly. The guidance will not prescribe appropriate NAV facilities terms or suggest when it is acceptable for NAV facilities to be used; the facts and circumstances of the facility, the GP and the portfolio should determine its use.

Timeline

ILPA has begun a confidential, closed comment period to receive written and verbal feedback on the draft guidance from LPs, GPs, law firms, lenders, rating agencies and other interested parties active in the NAV facility lending business. The guidance is expected late spring 2024.

Contact: [email protected]