Nodem Capital

Family Office Case Studies

Case Study: Unlock capital without selling growing private assets

Background

A large European family office (in this example, Family Invest) is looking to unlock $40m for new, time-sensitive investments. The team has identified four paths.

Option 1

Do nothing

Wait for distributions and pass on the opportunities.

Option 2

Leverage the public portfolio

Family offices can utalise Lombard Loans from a private bank against their highly diversified public allocation at an interest rate of around 5% (SOFR + 1%). This is tricky for Family Invest as the public book is already being leveraged as a tool for family cash flow management. Further, Family Invest avoids mixing public and private assets in its decision-making.

Option 3

Sell a portion of the portfolio in the private secondary markets

Family Invest has identified an intermediary (charging a 2% success fee on the sale price) to sell a portion of the portfolio. They decide to try this process.

What happened? Time and expense

New-vintage LP interests attract no bids, while many others attract bids at a 50% discount to NAV. The most valuable/mature stakes in A, B, and C attracted bids of -30% versus the current NAV.
The process took 5 months to close, with meaningful interaction with the GP, the intermediary, and the buying LP. Selling these stakes generated $52.5m ($50.9m net), enabling the family office to make new investments.

The real cost of Secondaries

The main issue here is that the LP stakes that were sold are expected to grow sharply over the next two years. The chart below shows that the real cost is the loss of future value (calculated as the Secondary Price Today minus the expected NAV on 31 December 2027).

Option 4

Generate capital against a private market portfolio via a Nodem NAV facility

Family Invest works with Nodem to generate $40m in cash within 5 weeks by securing a NAV loan against $215m of residual portfolio value (an 18.6% LTV NAV facility). They generate liquidity for accretive investments without the need to sell.

The headline cost of the NAV facility is a 10% pa PIK. Payment-in-Kind (PIK) is interest that isn't paid in cash but is added to the principal balance (aligned with natural distributions).

The NAV facility waterfall

1. Family Invest receive from the NAV facility.

2. $25m of the NAV facility is repaid from Venture Fund B distributions on 31st December 2026. This $25m is paid after a full 12 months of PIK accrual. Resulting in a post NAV balance of $19m.

3. The outstanding NAV loan is then fully repaid on 31st December 2027. Paid after another 12 months of PIK have accrued on the $19m balance.

Decision-Making Matrix