Wealthy individuals and family offices are increasingly borrowing against their private equity portfolios as a prolonged slowdown in dealmaking reduces the amount of cash being returned by buyout funds, according to a report by the Financial Times.
Net asset value (NAV) lending, historically used primarily by institutional investors to unlock liquidity from private equity and private credit holdings, is gaining traction among private wealth clients seeking access to capital without selling their underlying investments.
Buyout funds have returned significantly less cash to investors over the past four years than during the preceding decade, as weaker transaction activity has limited exits and distributions. The resulting liquidity constraints are affecting a broad range of investors, from pension funds and private equity executives to wealthy individuals.
Family offices increased their allocation to private equity and private debt to 20% of their portfolios in 2025, from 16% in 2019, according to UBS research, further increasing the potential demand for financing against illiquid holdings.
NAV lending allows investors to borrow against the value of their private market portfolios rather than sell their interests on the secondary market, where transactions can involve discounts to underlying asset values.
The approach can therefore provide investors with liquidity while allowing them to retain their exposure to the underlying private equity investments. Borrowed capital can also be redeployed into other investments or used to meet liquidity requirements.
The global NAV lending market is estimated at around $150bn by Fund Finance Partners, with the average transaction size standing at approximately $150m.
