Wealthy investors borrowing against PE holdings amid distributions slowdown

Amid a slowdown in private equity dealmaking, wealthy investors are turning to borrowing against their private equity holdings to secure much-needed liquidity, according to a recent report by the Financial Times. This trend, known as net asset value (NAV) lending, was once primarily utilized by institutional investors to tap into liquidity from private equity and private credit assets.

However, as deal activity declines, private wealth clients are increasingly seeking alternative means to access capital without having to sell their underlying investments.

The past four years have seen buyout funds return significantly less cash to investors compared to the previous decade, due to reduced transaction activity that has limited exits and distributions. This liquidity crunch has impacted a wide range of investors, including pension funds, private equity executives, and high-net-worth individuals.

In response, family offices have expanded their allocation to private equity and private debt to 20% of their portfolios in 2025, up from 16% in 2019, as per UBS research, fueling the demand for financing against illiquid holdings.

NAV lending offers a solution that allows investors to borrow against the value of their private market portfolios, rather than disposing of their interests on the secondary market, where transactions often involve discounts to the actual asset values. By accessing borrowed capital, investors can maintain their exposure to the underlying private equity investments while meeting their liquidity needs. Borrowed funds can then be utilized to invest in other opportunities or to fulfill liquidity requirements.

The global NAV lending market is currently valued at around $150 billion, with an average transaction size of approximately $150 million, as estimated by Fund Finance Partners.