Wealthy Investors Have Increased Borrowing Against Equity
Investors are utilizing net asset value loans to access liquidity while capital remains locked in buyout funds.
Updated on Sept. 28, 2026 in Investing
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Wealthy individuals and family offices have turned to net asset value (NAV) lending to access cash without liquidating their private equity stakes. This shift follows a four-year downturn in dealmaking that significantly reduced cash payouts from traditional buyout funds.
Why it matters
The rise in NAV lending allows investors to bridge liquidity gaps while their capital remains tied up in long-term funds. It provides a strategic alternative to selling assets on the secondary market during periods of suppressed market activity.
The NAV lending market has reached a total value of $150 billion, with average deal sizes hitting $150 million. Banks typically limit loan-to-value ratios for these assets to between 25 and 35 percent, compared to 40 to 60 percent for art-backed loans.
The players
Family Offices
These are private wealth management firms that handle investments and capital for ultra-high-net-worth individuals and their families.
The details
Investors are increasingly collateralizing their private holdings to secure two- to three-year loans. This trend reflects the broader challenge of accessing capital as buyout funds have returned less cash since 2015 compared to the previous decade.
Timeline
From 2015 to 2025, buyout funds returned less cash to investors than in the previous decade.
In 2019, family offices allocated 16 percent of their total assets to private equity and private debt.
By 2025, family office allocations to these private assets had increased to 20 percent.
Current NAV loan terms typically span a duration of two to three years.
Market Dynamics
This increase in borrowing reflects a broader shift where investors leverage private holdings to navigate market illiquidity. The practice mirrors a departure from traditional secondary market sales, indicating a structural change in how private capital is managed relative to the four-year dealmaking downturn.
For high-net-worth investors, these loans provide immediate cash flow without the need to sacrifice long-term investment positions. However, borrowers must be prepared for the risks associated with pledging illiquid assets as collateral during volatile market cycles.
The takeaway
Investors should carefully weigh the benefits of immediate liquidity against the risks of high-interest debt tied to their private portfolios. Utilizing these loans requires a precise understanding of loan-to-value thresholds and the duration of capital lock-ups.
Further reading
Explore deeper trends in private capital and portfolio management on our Investing page.
Source note: This article includes information reported by Financial Times News.
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