Lavanya Raghavan

NAV and Holdco back leverage facilities: balancing stakeholder interests to maximise value creation

The rapid evolution of fund finance has propelled Net Asset Value and Holdco back leverage facilities (that is, facilities in which one or more holding companies below the fund enter the financing) to the forefront of liquidity and portfolio management for funds across asset classes. These facilities, which allow funds to borrow against the value of their underlying investments, have become increasingly sophisticated and prevalent. As the market matures, both limited partners and lenders are sharpening their focus on transparency, risk management and enforceability. This article explores the practical realities of collateral enforcement, the legal guardrails being adopted, and the value these facilities can unlock; balancing the perspectives and interests of limited partners, general partners, and lenders.