As first reported by Bloomberg, Apollo Global Management is eyeing the burgeoning strategy of unorthodox loans tied to the net asset value in private equity portfolios, with around $4 billion of potential opportunities in the near-term.
The originations are planned for the coming months and are primarily for buyout funds, although the source cautioned that these details are not set in stone.
Apollo’s plans were first reported Tuesday by Bloomberg.
NAV lending is a type of loan that is collateralized by the net asset value of a private equity portfolio.
This means that the lender’s repayment is secured by the value of the underlying investments in the portfolio.
NAV lending can be used to provide liquidity to limited partners (LPs), make investments, or deleverage portfolio companies.
Apollo is not the only player in the NAV lending space.
Other firms that offer NAV lending include 17Capital, Fund Finance Partners, Hunter Point Capital, and Hark Capital.
The growth of NAV lending is being driven by a number of factors, including:
- The increasing size and complexity of private equity portfolios.
- The need for LPs to access liquidity.
- The desire of private equity firms to make investments.
- The availability of capital from lenders.
