NAV Financing in Private Equity: Increasing Liquidity, Facilitating Acquisitions, Improving Investment Returns
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Banking and Finance
- event Date
Tuesday, October 17, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will discuss the rapidly growing and evolving market for net asset value (NAV) credit facilities. The panel will examine the typical structure of NAV facilities and will review the advantages and disadvantages of NAV facilities for both lenders and borrowers.
Mr. Hicks has an extensive financing practice that focuses on private investment fund and energy-related secured transactions. He has advised many leading global financial institutions in secured fund financings, including NAV, hybrid, and subscription facilities to hedge fund, fund of fund, and private equity debtors. His practice also routinely involves advising global financial institutions as agents, lead arrangers and creditors in syndicated lending transactions to leading energy and commodity companies. Mr. Hicks has substantial experience helping clients identify and efficiently address the complexities that present in fund-related financings and other complex cross-border transactions. He is also a regular contributor to legal thought leadership through his leadership positions with the ABA’s Business Law Section and other industry groups.
Ms. Teixeira is counsel in the finance group and regularly advises fund clients and lenders on a variety of fund level financings, including bilateral and syndicated subscription facilities, NAV facilities, leverage facilities for credit funds, management company lines to investment advisors and employee co-investment loan programs. She is a frequent author and lecturer on fund finance issues.
Ms. Snelson has extensive experience acting as lead counsel for lenders, private equity funds, and their portfolio companies in connection with leveraged finance and fund/portfolio finance transactions. She is dual qualified in New York and England & Wales and practiced previously in the UK. Ms. Snelson has acted as lead counsel on hundreds of finance transactions that span a wide array of industries and jurisdictions throughout the Americas, Europe and Asia. Hers experience also includes advising investors and borrowers in connection with both in- and out-of-court debt restructurings, DIP financings, exit financings, 363 sales, English administrations and schemes of arrangements, and insolvency related matters in several European jurisdictions.
This webinar will focus on NAV financings to private equity (PE) funds where the value of the portfolio companies comprising the investment assets of the PE fund provide support for the borrower's loan obligations. PE sponsors are increasingly taking advantage of this previously underused area of the fund financing market to help manage liquidity and support fund performance.
NAV credit facilities are often used by PE funds after the fund has matured beyond its investment period, when it has typically exhausted most of its investor capital commitments. After the investment period, funds generally cannot access borrowing availability under a subscription-backed credit facility because they do not have sufficient remaining uncalled capital commitments. With a subscription-backed credit facility unavailable, the fund may turn to a NAV credit facility to provide the liquidity necessary to manage its portfolio and investment activities.
NAV credit facilities allow sponsors to obtain the liquidity necessary to effectively manage the PE fund and maximize its performance. Fund investors can also receive a return on capital without resorting to a sale and foregoing any potential additional upside from holding the investments longer. Lenders can also benefit from the attractive structuring and pricing options that NAV credit facilities present.
Listen as our authoritative panel explains the features and mechanics of NAV credit financing. The panel will also address the advantages and disadvantages of NAV credit facilities for both lenders and borrowers.
- Overview of NAV credit facilities
- The rise of NAV financing in the PE market
- Structure and collateral of NAV facilities
- Differences between NAV credit facilities and subscription-backed credit facilities
- Advantages and disadvantages of NAV credit facilities
- For funds, sponsors, and investors
- For lenders
- Business and legal considerations
- Collateral package
- Loan to value
- Cash flow/repayments
- Minimum assets/diversity in investment portfolio
- Flexibility
- Practical considerations and key takeaways
The panel will address these and other key issues:
- What are the market conditions that are prompting the rapid growth in NAV credit facilities?
- Why would PE funds use NAV financing to meet their needs and achieve various objectives?
- What are the business and legal issues and considerations with NAV financings?
- What are the advantages and disadvantages of NAV financing for PE funds, sponsors, investors, and lenders?
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