NAV Financing Market Report 2025
Rede Partners is delighted to publish its NAV Financing Market Report 2025, our latest White Paper based on proprietary research and market insights. Drawing on data from Rede’s 2025 survey of lenders active in the NAV financing market, our analysis sheds light on an increasingly established portfolio management strategy within Private Markets funds. The report provides a summary of the current state of the market, exploring recent developments together with lender forecasts for the coming year.
Key findings from the report:
1. Use of NAV financings continues to gain momentum
Our 2025 survey shows that NAV financing has continued to gain momentum within private markets over the past year. The use of NAV facilities is now firmly established as a portfolio management tool for private markets managers seeking to optimise liquidity, fund performance and capital efficiency.
2. Cost of NAV facilities falls as spreads narrow
Over the past year, lenders report that spreads for NAV facilities decreased by roughly 40 basis points, with most deals converging around a margin range of 4%-7%. The difference in spreads between secured and recourse-light lending is relatively narrow (5.2% for secured, compared with 6.6% for recourse-light loans). This offers GPs an opportunity to meet investor preference in certain circumstances for flexible, recourse-light facilities with limited enforcement rights at a competitive cost of capital.
3. Clear signs NAV financing is penetrating new market areas
NAV facilities, once principally the preserve of Upper Mid-Market and Large Cap buyout funds, are now being implemented in a more diverse range of fund sizes, asset classes, and geographies, though some strategies are adopting them faster than others. In particular, smaller funds are increasingly likely to use NAV facilities, and lenders reported a marked increase in deals they reviewed for funds under €500mn in size or in the €500mn-€2.5bn range. Meanwhile, NAV financing deals for continuation vehicles (CVs) and Real Asset portfolios are also expected to grow further in the coming year. Geographically, the spread of adoption away from Europe and North America toward Asia-Pacific has been slower, and lenders indicate that APAC NAV deal volumes remain muted. However, even here, 34% of lenders believed they would see an expansion in the region in 2025, with some commenting that they were interested to review such opportunities.
4. Continued shift towards using NAV loans to increase investment firepower
The perception that NAV financings are merely a way to ‘artificially’ enhance DPI is increasingly obsolete. Despite a challenging exit environment, 2024 saw a further fall in NAV facilities being deployed primarily to generate DPI. This is likely to be in response to continued investor concerns around use of proceeds for distributions, as we discussed in our 2024 survey, and is consistent with findings from both the Institutional Limited Partners Association (ILPA) and Fund Finance Association research. At the same time, the use of NAV financing to raise follow-on capital, broadly a source of positive investor sentiment, saw a notable expansion.
5. Early signs of adoption of ILPA Guidelines
There are early signs that the ILPA Guidelines on NAV Financing, released in July 2024, are being adopted by GPs and treated as best practice, with 43% of our respondents indicating that they have already experienced their application in deals. These Guidelines include important notes for GPs and lenders on unforeseen circumstances such as foreclosure, as well as on what lenders should allow GPs to disclose to their investors and LPACs. We expect to see more GPs routinely using the Guidelines as we go forward.