NAV financing is a loan raised at the level of a private equity fund, secured against the net asset value (NAV) of its entire portfolio of holdings rather than a single target company. It lets the fund generate liquidity (distributions to investors, funding of add-ons, support for portfolio companies) without selling assets.

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A central fund liquidity tool in 2026, it has sparked debate over its real impact on net returns and fund-level leverage. For the valuer, the presence of NAV financing changes the analysis of effective leverage and the cash flows returning to investors.

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Example: a fund holding 8 investments valued at CHF 400 million raises NAV financing of CHF 60 million (15% of NAV) to fund three add-on acquisitions without an additional capital call from its investors.

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At Hectelion, we account for NAV financing in the analysis of leverage and cash flows of a fund or holding structure.