A family office can hold substantial wealth in private funds and still face a short-term cash requirement. New reporting shows that borrowing against those interests is moving further into private wealth, but it is a structure to prepare in advance, not a facility to assume can be activated when a deadline is already close.
The Financial Times reports that wealthy individuals and family offices are increasingly considering net-asset-value lending as subdued private-equity exits restrict distributions. The publication estimates the global NAV-lending market at around $150bn and cites UBS data showing family-office allocations to private equity and private debt rising from approximately 16% in 2019 to 20% in 2025.
A separate Family Wealth Report analysis published on 29 September explains the practical structure. A lender assesses eligible interests held within a family-controlled vehicle, lends to an appropriate borrowing entity and takes security over the eligible assets and the cash distributions they produce. The underlying private funds themselves are not the borrowers.
What the New Reporting Shows
$150bn: the approximate size of the global NAV-lending market reported by the Financial Times.
20%: the reported average family-office allocation to private equity and private debt in 2025, up from around 16% in 2019.
25%–35%: lending levels against portfolio value cited by the FT, reflecting the illiquidity of the collateral and varying by assets and structure.
Not a rapid switch: fund-document restrictions, entity analysis, consents and control of distribution accounts can make preparation the longest part of the process.
What Is NAV Lending Against Private-Fund Interests?
In this context, NAV lending is finance raised by an investor against a portfolio of private-equity, private-credit or other eligible private-fund interests. The lender does not simply apply an advance rate to the headline value on the latest quarterly statement. It defines an eligible borrowing base after assessing diversification, manager quality, fund maturity, currencies, valuation, unfunded commitments, concentration and existing debt.
The family normally keeps its interests rather than selling them in the secondary market. In return, the lender may take security over the holding vehicle, eligible interests and the accounts receiving distributions. Repayment is commonly expected from future distributions, while the documents specify what happens if values fall or cash arrives later than forecast.
This is distinct from fund-level NAV finance arranged by a private-equity manager. Here, the borrower is the family or investor vehicle holding limited-partner interests; the underlying funds have not themselves taken the loan.
Why This Is Not Conventional Lombard Lending
Lombard facilities are generally secured against liquid, frequently priced investments held with a bank or custodian. Listed securities can usually be valued daily and, if necessary, sold more readily. That supports established lending values, margin monitoring and relatively standard security arrangements.
Private funds behave differently. Interests may be difficult to transfer, valuations arrive periodically, distributions are uncertain and limited partnership agreements can restrict pledges, transfers or changes of control. A lender therefore spends more time deciding which interests are eligible, what value it recognises and how it can control future cash flows.
The result may be a useful liquidity tool, but it is not simply “Lombard finance at a lower advance rate”. Legal diligence, entity structuring, concentration limits and distribution waterfalls are fundamental to whether the facility works.
| Potential Collateral | Potential Advantage | Principal Issue to Test |
|---|---|---|
| UK property | Deep lender market and potentially long-dated borrowing. | Valuation, income, affordability, security, transaction timing and property-specific costs. |
| Listed investments | Potentially rapid, flexible Lombard liquidity without selling the portfolio. | Market volatility, margin calls, eligible securities, custody and lender concentration. |
| Private-fund interests | Liquidity while retaining illiquid investments and avoiding an immediate secondary sale. | Eligibility, pledge restrictions, valuation, cash sweeps, distributions, entity powers and consents. |
The Better Question Is Which Asset Should Carry the Debt?
Consider a family with £15m of property, £20m of listed investments and £30m committed across private-equity and private-credit funds. A £5m liquidity requirement could potentially be addressed through property finance, securities-backed lending, private-fund NAV finance or a combination.
Those routes are not interchangeable. A property loan may offer term certainty but take longer and encumber a strategic asset. Lombard finance may be quicker but expose the family to market-value and margin-call risk. A private-fund facility may align repayment with distributions but impose cash sweeps, eligibility haircuts and meaningful legal work.
A family-office liquidity review should compare usable proceeds, all-in cost, term, certainty, security, covenants, control of cash, downside triggers, prepayment and the planned repayment source. The lowest quoted margin is not necessarily the lowest-risk or most flexible solution.
The HNW Liquidity Benchmark
Map three possible collateral pools—property, listed securities and private-market interests—before choosing the debt. For each route, establish realistic proceeds, timing, cash-flow obligations, downside exposure and exit. The purpose is not to maximise borrowing, but to place the required debt where it creates the least damaging constraint.
Why Families Use NAV Facilities
The defensive use is to bridge a timing mismatch. Several capital calls may arrive before expected distributions, a tax or other payment may fall due, or a family may prefer not to sell listed investments or property at an inconvenient time.
The opportunistic use can be equally important. A co-investment, acquisition or scarce manager allocation may have a short execution window. An arranged facility can allow the family to act without holding excessive cash throughout the year or rushing a secondary-market sale.
Borrowing preserves the investments, but it does not eliminate risk. Interest and fees accrue even if distributions disappoint, and an undrawn facility may carry commitment costs. The family needs a primary repayment route and a credible fallback.
Eligible Value Is More Important Than Reported NAV
A £30m portfolio does not automatically produce a facility based on £30m. A lender may exclude concentrated positions, cap exposure to individual managers or strategies, adjust foreign-currency assets, discount older valuations and deduct existing liabilities or unfunded commitments.
The recognised borrowing base can change as valuations, distributions and portfolio composition change. Documents may require repayment, additional collateral or another cure if coverage falls. Before drawing, the family should model the effect of valuation reductions and delayed exits rather than relying on the latest reported NAV.
Published ranges are only market illustrations. The FT cites loans around 25%–35% of portfolio value, while the Family Wealth Report contributor describes a wider 10%–40% range of eligible value for diversified portfolios. Neither is a promise of leverage for a particular family or fund portfolio.
The Legal Work Can Determine the Timetable
Limited partnership agreements frequently restrict pledges or transfers. Some may treat security over a holding vehicle as an indirect transfer. Each relevant agreement must be reviewed and, in some cases, manager or other consent may be required.
The correct borrower must also be identified. Fund interests may be owned by companies, partnerships or trusts, while the person needing liquidity may sit elsewhere in the family structure. Lawyers must confirm which entity can borrow, pledge assets, give guarantees and apply the proceeds.
Finally, the lender usually needs rights over the accounts into which distributions are paid. That can require control agreements with custodians and acknowledgements from third parties. These steps are manageable, but they do not respond well to an urgent deadline.
Cash Sweeps Change How Distributions Are Used
A NAV facility may direct fund distributions into a controlled account and use them to reduce the loan before cash reaches the family. That can apply during the ordinary life of a performing facility, not only after default.
The family should establish which payments can be made before a sweep—for example, capital calls, taxes and operating expenses—and how much cash remains available for new investment. A loan intended to solve one liquidity problem should not inadvertently create another by trapping every subsequent distribution.
Distribution timing also matters. If exits remain slow for longer than expected, the facility may need extension, refinance or repayment from another asset. The downside plan should be agreed at inception.
Do the Quiet-Quarter Work
Before an urgent need arises, identify the holding entities, collect fund documents, test pledge restrictions, map distribution accounts and estimate eligible value. A family can complete this feasibility work without immediately committing to or drawing a facility, while materially improving its readiness.
Property Buyers Should Compare the Whole Balance Sheet
A £5m London acquisition does not necessarily have to be funded entirely with cash or a mortgage secured only against the property. For a suitable sophisticated client, property debt, Lombard finance and NAV lending may all warrant comparison.
The acquisition loan may still be the best answer, particularly where the property supports attractive long-term debt and the private-fund portfolio would require disproportionate structuring. In other cases, a securities-backed or NAV facility could reduce execution risk or preserve flexibility over the property.
Where several facilities are combined, cross-defaults, security overlap, currency, maturity concentration and aggregate leverage must be reviewed together. Debt should be assessed at family balance-sheet level, not product by product.
How Willow Private Finance Can Help
Willow can begin with the liquidity requirement rather than a predetermined product. We can map property, listed investments and private-market interests; establish the amount, timing, term and intended repayment source; and compare which collateral pool may support an appropriate structure.
Where specialist private-fund finance could be relevant, the next step is coordinated diligence with the family office, wealth manager, lawyers, trustees and suitable lenders. Willow does not value private-fund interests, interpret partnership agreements or provide legal, tax or investment advice.
The objective is a credible HNW Liquidity Benchmark: a comparison of realistic borrowing routes, their trade-offs and the preparation each requires before the family is under time pressure.
Which Part of the Family Balance Sheet Should Support the Liquidity?
Property, listed securities and private-fund interests can produce very different borrowing outcomes. Willow can help benchmark the available routes around the family’s assets, timetable and repayment plan.
Start the review before a purchase, capital call or other deadline turns structure into urgency.
Explore Portfolio-Backed Lending →Frequently Asked Questions
Key questions for families considering liquidity against private-market investments.
What is NAV lending for a family office?
NAV lending allows an eligible borrowing vehicle to raise finance against the eligible value of a portfolio of private-fund interests and the distributions those interests produce. The family retains the investments, subject to the facility’s security and cash-control arrangements.
How does NAV lending differ from Lombard lending?
Lombard lending is generally secured against liquid, readily valued investments such as listed securities. Private-fund interests are illiquid, valued periodically and may be subject to transfer or pledge restrictions, so NAV facilities usually require more legal, structural and eligibility work.
How much can a family office borrow against private funds?
There is no universal advance rate. The Financial Times reported lending commonly around 25% to 35% of portfolio value in the market it described, while a specialist contributor to Family Wealth Report cited 10% to 40% of eligible value for diversified portfolios. Actual proceeds depend on eligibility, concentration, valuation, currencies, existing debt and underwriting.
What can NAV lending be used for?
Potential uses include meeting capital calls, funding co-investments, bridging tax or other payment timing, making acquisitions or creating liquidity without an immediate secondary-market sale. Permitted uses depend on the facility documents and lender.
Why should NAV finance be considered before cash is urgently needed?
Limited partnership agreements may restrict pledges or transfers, the correct borrower and security providers must be established, and distribution accounts may need lender control. Document review, consents and account arrangements can therefore take time even where the credit case is attractive.