Borrowing Against Private Equity Holdings: What the FT Got Right, and What Happens Next

The Financial Times reported this week that wealthy individuals have started borrowing against their private equity holdings to offset a four-year dealmaking downturn that has squeezed payouts from buyout funds (Rich turn to borrowing against private equity holdings as payouts slow, Josh Spero, September 2026). NAV lending, once a tool for institutions, is now being adopted by rich individuals and the family offices that manage their wealth.

We lend in exactly this corner of the market, so we thought it worth explaining what the trend looks like from the lender’s side of the table. The short version: the FT is right that this is happening, it is happening for sensible reasons, and the most interesting part of the story is who is not being served.

Why payouts have slowed and why that matters

Private equity funds return capital when they sell companies. As the FT notes, buyout funds have returned far less cash to their backers over the past four years than in the previous decade, because dealmaking has been sluggish. Pension funds, buyout executives and individuals alike are looking for other sources of liquidity while their capital stays locked up.

For families the pressure is sharper than for institutions, because their exposure has grown. The FT cites UBS research showing family offices allocated 20 percent of assets to private equity and private debt in 2025, up from 16 percent in 2019. A fifth of the balance sheet is now in positions that cannot be sold quickly, and Goldman Sachs told the FT its clients are becoming less tolerant of assets that are not working for them.

The traditional source of family liquidity, the private bank, has historically struggled here. Most private banks lend against listed securities under Lombard arrangements, and even Goldman’s head of private banking lending described NAV loans as being at the top end of the difficulty scale for a bank. That leaves two options: sell positions in the secondary market at a discount, or borrow against the portfolio. Borrowing lets a family raise cash without crystallising a loss, which is why it has become the preferred route.

What a NAV loan actually is

A NAV loan (net asset value loan) is a term facility secured against a portfolio of private investments rather than against a single asset. The lender looks at the whole portfolio, its diversification, its expected distribution timeline and its valuation history, and advances a percentage of its net asset value.

Security typically takes the form of a pledge over the holding vehicle that owns the fund interests, plus a pledge over the account into which distributions are paid. Nothing is sold, no fund manager is asked for consent in most structures, and the family keeps all of the upside on the portfolio.

Repayment comes from the distributions themselves. As funds exit companies and pay out, a share of each distribution sweeps to the lender until the loan is repaid.

What family offices use them for

Across the enquiries we see, roughly two thirds from single family offices, the use cases fall into five groups.

Bridging capital calls

Overlapping capital calls from several funds exceed the family’s liquid reserves. Defaulting on a commitment is expensive and reputationally damaging, and selling secondary positions to fund a call means giving up value. A NAV facility bridges the gap until distributions arrive.

Funding acquisitions and co-investments

A time-sensitive opportunity needs capital faster than a secondary sale or a bank process can deliver. The facility provides immediate capital secured against existing holdings, and the family closes the deal without selling anything. This is the “redeploy into other investments” use the FT describes, and it is the most common reason families come to us.

Refinancing bank debt

Cash-pay bank facilities create a mismatch with illiquid portfolios: interest is due every quarter, distributions are not. A NAV loan with PIK interest (payment in kind, where interest accrues and is paid from distributions or at maturity) removes that strain.

Generational transfers and tax planning

Liquidity for estate restructuring, wealth transfers or tax obligations, without crystallising embedded capital gains by selling positions.

Rebalancing and new strategy

Freeing capital to diversify into new managers, asset classes or direct investments while the existing portfolio continues to mature.

What the terms look like

The FT reports that Goldman Sachs will generally lend 25 to 35 percent of asset value on NAV loans, on two to three year terms that are commonly renewed. That is a fair description of the bank end of the market. A specialist lender’s terms are broadly similar on LTV but differ on tenor, interest structure and speed.

Every facility is bespoke, but the ranges below reflect what Nodem typically provides.

Facility size: $10 million to $100 million and above

Loan to value: typically up to 30 percent of net asset value, with higher ratios for real estate portfolios and highly diversified LP books

Pricing: around 400 basis points over base for large diversified LP portfolios, 500 to 750+ basis points for concentrated or short duration facilities.

Interest: cash pay or PIK (can be +50bps to 100bps).

Term: one to seven years, extendable, structured around the portfolio’s expected distributions rather than a fixed bank renewal cycle

Repayment: cash flow sweep from distributions, with early repayment allowed without penalty

Currency: USD, EUR or GBP, with cross-currency structures available

Timing: term sheet within days of receiving portfolio data, funding around one month later, with no requirement to move banking, custody or deposits

Who is borrowing, and who is being left out

The FT puts the total NAV lending market at around $150 billion, citing Fund Finance Partners, with an average deal size of about $150 million. That second number is the one to notice. It tells you the market has been built for institutions and the very largest families.

Very large family offices, with private portfolios well above $100 million, have always been able to access NAV financing from the large platforms and, increasingly, from the private banks the FT quotes. Very small holdings do not justify the structuring cost of a bespoke loan.

The family with $30 million to $150 million of private fund interests sits in a gap. It is too illiquid for the Lombard desk and too small for platforms whose deals average $150 million and whose minimums often start at $100 million. That is where we see demand growing fastest, and it is the segment specialist lenders exist to serve.

The FT quotes AllianceBernstein describing how NAV lending to individuals has gone from a one-off transaction ten years ago to a recognised category. We would add that the category is now splitting in two: a bank-led market for the largest families, and a specialist market for everyone below the $100 million line.

What to ask before signing

A NAV loan is a sensible tool when it is structured properly and a costly one when it is not. Before signing a term sheet, a family should be clear on:

1.          What triggers repayment. Is it a fixed maturity, a distribution sweep, or both? What happens if distributions arrive later than expected? A two to three year bank facility that must be renewed can become a problem if the exit market is still slow at renewal.

2.          What happens if valuations fall. Is there an LTV covenant, what is the cure period, and does the lender have the right to force sales?

3.          Whether interest is cash pay or PIK. PIK protects cash flow but compounds. Make sure the projected distributions cover the accrued balance.

4.          What security is granted. A pledge over a holding vehicle is standard. A lender asking for direct assignment of fund interests may create transfer consent problems with the fund managers.

5.          What else the lender wants. Banks often expect the borrower’s wider relationship, meaning deposits, custody or other business, alongside the loan. A standalone facility has no such strings.

6.          Whether the lender understands the assets. Underwriting a portfolio of venture and buyout fund interests is a specialist skill. A lender that has done it before will move in days. One that has not will take months.

The bottom line

Distributions will pick up again when exit markets recover. In the meantime, borrowing against private equity holdings is a rational response to a liquidity mismatch, not a sign of distress. The families using NAV loans well are treating them as a bridge between a portfolio’s value today and the cash it will generate over the next few years, and paying a reasonable price for not having to sell at a discount.

Nodem Capital is an FCA-authorised NAV lender providing facilities of $10 million to $100 million and above to family offices, wealthy individuals and private funds. We review more than $2 billion of NAV lending opportunities each year. To discuss a portfolio in confidence, contact Alex Branton at abranton@nodem.com or visit our NAV loan parameters page.

Frequently asked questions

Can you borrow against private equity fund interests?

Yes. A NAV loan is secured against a portfolio of private equity, venture capital, real estate or other private fund interests. Specialist lenders such as Nodem Capital provide facilities of $10 million to $100 million and above at loan to value ratios typically up to 30 percent.

Why will my private bank not lend against private equity?

Most private banks lend under Lombard arrangements that require listed, liquid collateral. Private fund interests cannot be valued daily or sold quickly, so they fall outside most banks’ credit policy. The banks that do offer NAV loans, such as Goldman Sachs, generally lend 25 to 35 percent of value on two to three year terms and typically expect a wider banking relationship.

How much does a NAV loan cost?

Pricing typically ranges from around 400 basis points over base for large, diversified portfolios of LP interests to 500 to 750 basis points for concentrated or direct portfolios. Interest can be paid in cash or accrued as PIK.

How big is the NAV lending market?

Around $150 billion according to Fund Finance Partners research cited by the Financial Times, with an average deal size of about $150 million. Most of that volume is institutional. Lending to family offices and individuals is a smaller but fast growing segment.

How long does it take to get a NAV loan?

With a specialist lender, an indication of appetite comes within days of receiving portfolio information, a term sheet follows within days of that, and funding takes around one month. Banks commonly take six months or more.

Is borrowing against private equity a sign of distress?

No. Most borrowers are using NAV facilities to bridge capital calls, fund new investments or manage tax and succession planning without selling positions at a discount. The loan is repaid from the portfolio’s own distributions.