Big investors borrow against private equity holdings amid cash crunch

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Financial Times 15h ago

Big investors borrow against private equity holdings amid cash crunch - Financial Times

Quick Summary:

So far, the biggest loans have reached around $800mn in size, although people familiar with pending transactions said that they will soon eclipse $1bn in size.“It’s a liquidity management tool that not everybody is using, but the largest, more sophisticated limited partners are using to help manage their balance sheet,” said one lender who has provided financing for these loans.

The loans are typically for four or five years and have loan-to-value ratios of about 20 per cent, causing buyers like insurance companies and private credit funds to deem them safe assets.

Other investors that have taken out NAV loans are family offices and sovereign wealth funds, according to people involved in the deals.