Strategic finance for investors in private equity

Helping high-quality private equity management companies, funds and institutional investors as part of their toolkit for value creation and portfolio management.

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Best Fund Financing Solution winner at the Private Equity Wire European Awards 2023

The awards showcase the best and most innovative firms in the private equity industry and recognise their achievements across fund performance and fundraising success.

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What is NAV financing

and how is it used?

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17Capital announces closing of €2.6bn NAV lending fund

Inaugural fund marks one of the largest debut private credit funds ever raised

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NAV lending

The emerging opportunity for private debt investors

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NAV finance for investors in Private Equity

Since 2008 and with over 90 investments we have helped high quality private equity management companies, funds and institutional investors as part of their toolkit for value creation and portfolio management.

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NAV finance

17Capital offers NAV finance providing private equity investors flexible solutions, whether investing for portfolio growth, improving fund performance, or increasing commitments to new funds.

The story of 17Capital

Firm News

Originally featured in Private Equity News  Today's GPs are managing $10tr. That's a five-fold increase in 15 years. To facilitate this growth, the industry has had to evolve new tools. These are necessary. Everyone would have been worse prepared to navigate the challenges of recent years - covid, war, inflation, and spiking rates - without a broader set of financing options. However, using them should always be about delivering value for a fund's investors and their own shareholders. This alignment of interest allows managers to build successful and sustainable franchises. One addition to the private equity toolbox is NAV financing - a lending strategy executed against the net asset value of a buyout fund. Swift adoption, and a tighter liquidity environment since 2022, has led to some misconceptions about the purpose and benefits of this lending. These are worth addressing. Distributions grip One gripe is that managers use NAV finance to enhance distributions to investors at the expense of a portfolio's performance and leverage. A review of 100 transactions totalling more than $13bn we've been involved in does not show that. Over 80% of the capital provided was used to finance growth and maximise value. Distributions was not the driving of the use case. In today's market with less liquidity and fewer exits available to buyout funds, hold periods have reached a near all-time high of around six years. As a result, around 60% of recent PE activity has been to support bolt-on acquisitions - a common use of NAV finance, which if well executed is a value accretive exercise to investors. PE firms themselves are also impacted by lower liquidity but many want to continue to grow, diversify, promote, and to make bigger capital commitments to their funds. Again, this is a standard use-case and a signal of alignment for investors. The squeeze on investor liquidity over recent years reflects a difficult exit environment, which has impacted net cashflows. In the prior decade, investors could expect more from distributions than would be called. Today, that is down to around 50-60% of those historic levels, which demonstrates that NAV finance has not become the panacea of investor liquidity. It was never intended to be. Not window dressing LPs are more rigorous in their due diligence than to be fooled by mere window dressing for tricky fundraising, especially in today's liquidity constrained environment. The bar for GPs to secure capital is higher. Managers will consult with their fund investors or advisory committee on the use of NAV finance, and they will disclose this in reporting. This is good practice and transparent. It also allows investors to better understand the use cases and intended benefits of these loans. For managers, it helps them to demonstrate their ability to deliver more value by accessing a wider range of financial options, and specifically the tools that are most appropriate for any given situation. Growth no distress There is a perception that portfolios must be experiencing distress because of the macro backdrop, so managers turn to NAV finance to prop up underperformance. Reality suggests the opposite. These facilities are most often used in strongly performing funds to unlock more growth. Being able to access alternative capital when other financing options have contracted is an important growth level for portfolio companies and PE firms. That makes rational sense because higher performing portfolios and managers should have access to more attractive financing alternatives than underperforming ones. More than a hammer We saw similar misconceptions around 'pass the parcel' deals, subscription finance and continuation vehicles. These tools are all now better understood and regularly used. Judgement should be based on outcomes; and, in the case of NAV finance, this is a credit strategy that should be used to create value, improve performance, and to maintain alignment of interests. Ultimately, if all you have is a hammer, everything looks like a nail. Thankfully, for today's PE industry and its investors, the toolkit is better stocked.

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Stay Updated

  • May 17 2024

    Pierre-Antoine de Selancy presents NAV finance at the Oaktree LA conference

    Watch co-founder Pierre-Antoine de Selancy present NAV finance at the Oaktree LA conference in April 2024.

    Read now
  • Mar 22 2024

    The Reorg Radio – The growth and use cases of NAV lending

    Managing Director Greg Hardiman recently spoke with Seth Brumby on Reorg Radio on “The Reorg Primary View” podcast about the benefits of NAV financing for private equity firms and investors looking to deploy capital in the current environment. Listen to the full episode here.

    Read now
  • Mar 20 2024

    In defence of NAV financing: a reply to recent criticisms

    Originally featured in Private Equity News  Today's GPs are managing $10tr. That's a five-fold increase in 15 years. To facilitate this growth, the industry has had to evolve new tools. These are necessary. Everyone would have been worse prepared to navigate the challenges of recent years - covid, war, inflation, and spiking rates - without a broader set of financing options. However, using them should always be about delivering value for a fund's investors and their own shareholders. This alignment of interest allows managers to build successful and sustainable franchises. One addition to the private equity toolbox is NAV financing - a lending strategy executed against the net asset value of a buyout fund. Swift adoption, and a tighter liquidity environment since 2022, has led to some misconceptions about the purpose and benefits of this lending. These are worth addressing. Distributions grip One gripe is that managers use NAV finance to enhance distributions to investors at the expense of a portfolio's performance and leverage. A review of 100 transactions totalling more than $13bn we've been involved in does not show that. Over 80% of the capital provided was used to finance growth and maximise value. Distributions was not the driving of the use case. In today's market with less liquidity and fewer exits available to buyout funds, hold periods have reached a near all-time high of around six years. As a result, around 60% of recent PE activity has been to support bolt-on acquisitions - a common use of NAV finance, which if well executed is a value accretive exercise to investors. PE firms themselves are also impacted by lower liquidity but many want to continue to grow, diversify, promote, and to make bigger capital commitments to their funds. Again, this is a standard use-case and a signal of alignment for investors. The squeeze on investor liquidity over recent years reflects a difficult exit environment, which has impacted net cashflows. In the prior decade, investors could expect more from distributions than would be called. Today, that is down to around 50-60% of those historic levels, which demonstrates that NAV finance has not become the panacea of investor liquidity. It was never intended to be. Not window dressing LPs are more rigorous in their due diligence than to be fooled by mere window dressing for tricky fundraising, especially in today's liquidity constrained environment. The bar for GPs to secure capital is higher. Managers will consult with their fund investors or advisory committee on the use of NAV finance, and they will disclose this in reporting. This is good practice and transparent. It also allows investors to better understand the use cases and intended benefits of these loans. For managers, it helps them to demonstrate their ability to deliver more value by accessing a wider range of financial options, and specifically the tools that are most appropriate for any given situation. Growth no distress There is a perception that portfolios must be experiencing distress because of the macro backdrop, so managers turn to NAV finance to prop up underperformance. Reality suggests the opposite. These facilities are most often used in strongly performing funds to unlock more growth. Being able to access alternative capital when other financing options have contracted is an important growth level for portfolio companies and PE firms. That makes rational sense because higher performing portfolios and managers should have access to more attractive financing alternatives than underperforming ones. More than a hammer We saw similar misconceptions around 'pass the parcel' deals, subscription finance and continuation vehicles. These tools are all now better understood and regularly used. Judgement should be based on outcomes; and, in the case of NAV finance, this is a credit strategy that should be used to create value, improve performance, and to maintain alignment of interests. Ultimately, if all you have is a hammer, everything looks like a nail. Thankfully, for today's PE industry and its investors, the toolkit is better stocked.

    Read now

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