The NAV financing market has become “firmly established” as a portfolio management tool for private markets managers as they seek to improve liquidity, fund performance and capital efficiency, according to a new report.
The NAV Financing Market Report 2025 published by Rede Partners found that, over the past year, NAV financing continued to gain momentum within private markets, amid penetration of new market areas, as well as market growth more generally.
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Rede Partners reported “clear signs” of growth in the NAV financing market between 2023 to 2024.
The average volume of NAV financings completed by each lender increased, with a weighted average of over €800m (£683m) per lender completing the survey, compared with €330m in 2023.
Lender dealflow also increased in 2024, as the weighted average number of deals reviewed by each lender climbed, from 19 in 2023 to 25 last year, while 43% of lenders reviewed more than 30 deals, compared with 25% the previous year.
There was also a rise in the average number of deals completed by each lender, up from 4.0 in 2023 to 4.4 in 2024.
Rede Partners attributed the growth in dealflow to an “increasingly intermediated market, as sponsors increasingly work with advisors on market engagement, structuring and terms”.
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The survey found “clear signs”, too, that NAV facilities are expanding into new market areas, as NAV financings become better understood and its benefits more broadly recognised.
Having once been the preserve of upper mid-market and large-cap buyout funds, NAV facilities are now being implemented in a more diverse range of fund sizes, asset classes, and geographies, according to Rede Partners, which noted that “some strategies are adopting them faster than others”.
Smaller funds are increasingly likely to use NAV facilities, the report found, with lenders reporting a “marked” increase in deals they reviewed for funds under €500m in size, or in the €500m to €2.5bn range.
Rede Partners forecast that NAV financing deals for continuation vehicles and real asset portfolios will grow in the coming year.
The survey data also pointed to continued downward pressure on the price of NAV facilities.
In 2024, spreads for NAV facilities decreased by approximately 40 basis points, with most deals converging around a margin range of 4 per cent to 7 per cent.
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