Private credit investor Pemberton Asset Management is partnering with the Abu Dhabi Investment Authority to raise at least $1bn to provide net asset value loans to private equity firms, according to a report by Bloomberg.
In a statement, Pemberton said that the new strategy would provide buyout firms with capital that will help them increase their commitments or do bolt-on acquisitions. ADIA is set to anchor the strategy, which is expected to close in the coming weeks.
NAV financing, which allows managers to layer more leverage on their funds late in their cycle on top of loans taken out by many managers when they first acquire a company, has grown in popularity in recent years as PE firms look to raise cash in a challenging exit environment.
NAV lending is usually executed either via loans against the net asset value – typically less than 25% – of a portfolio, or preferred equity.
The report cites Symon Drake-Brockman, the veteran debt banker who founded Pemberton in 2011, as saying that the fact that that ADIA is anchoring the strategy is proof that NAV loans are on their way to becoming a key financing tool in private markets.
