PitchBoo-k分析师注：导航ILPA的基于导航的设施指南（英）-2024-8正式版WN8

PitchBookData,Inc.

NizarTarhuniExecutiveVicePresidentof

ResearchandMarketIntelligence

DanielCook,CFAHeadofQuantitativeResearch

NavigatingILPA’sNAV-Based

FacilityGuidance

InstitutionalResearchGroup

Analysis

PitchBookisaMorningstarcompanyprovidingthemostcomprehensive,most

accurate,andhard-to-finddataforprofessionalsdoingbusinessintheprivatemarkets.

JulietClemens

Analyst,FundStrategies

juliet.clemens@

Keytakeaways

ZaneCarmean,CFA,CAIA

LeadAnalyst,Quantitativeand

FundsResearch

zane.carmean@

HilaryWiek,CFA,CAIA

SeniorStrategist

hilary.wiek@

pbinstitutionalresearch@

•TheInstitutionalLimitedPartnersAssociationrecentlyreleasedguidance

regardingtheuseoftheburgeoningsuiteofprivatecapitalfundliquidity/

portfoliomanagementtoolsknownasNAVfacilities,aproductthatisexpected

togrowto$600billionthisdecade.

•ILPA’sguidanceprovidesahistoryofNAV-basedfacilities,acollectionof

LPconcernsregardingtheiruseandtransparency,recommendationsfor

GPsonengagingtheirLPbase,proposedlegallanguage,andadditional

recommendationsregardingdisclosures.

Publishing

DesignedbyMeganWoodard

PublishedonAugust1,2024

•ThepastseveralyearshavepresentedsignificantshiftsinLP/GPrelationship

dynamics,andasfundtermsandGPtoolsbecomeevermorecomplex,ILPA

encouragesLPstobringaunitedfronttothenegotiatingtable.

Contents

Keytakeaways1

Introduction2

HistoryofNAVloans2

ILPA’sNAV-basedfacilityguidance4

Additionalconsiderationsregarding

LP/GPrelationsandnegotiations

7

1

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

Introduction

OnJuly25,theInstitutionalLimitedPartnersAssociation(ILPA)releaseditsmuch-

anticipatedguidancearoundthegrowingnetassetvalue(NAV)loansmarket.

WhileNAVfacilitieshaveexistedforacoupleofdecades,ascoveredinPitchBook’s

Q42023AnalystNote:NAVigatingConsiderationsandControversiesAround

NAVLoans,NAVlendinghasgrowntobecomea$100billionindustry,withsome

expectingittogrowto$600billionby2030.1TherapidadoptionofNAVfacilities

hasledtoconflictsthathavenecessitatedaconcertedefforttodevelopbest

practicesaroundtheseloans.

AsNAVloansandrelatedproductsbecomeincreasinglyprevalenttoolsusedby

GPs,theILPAguidanceaddressesthechallengesthatLPshaveencounteredwhen

facedwiththesefacilities.TheguidancealsoemphasizesthatGPsandLPsshould

takeaproactiveapproachtowardcommunicationtoaddresstheconfusion,tension,

andcontroversiesthathaveemergedwithNAVfacilities’rapidgrowth.

ThetopicofNAVfacilitieswasdiscussedatlengthbyPitchBookLeadAnalystZane

CarmeanandSeniorStrategistHilaryWiekalongsideILPA’sDirectorofIndustry

Affairs,BrianHoehn,inPitchBook’ssecondinstallmentofitsAllocatorAtlaswebinar

series,”NavigatingtheLP/GPRelationship:AConversationwithILPA.”

HistoryofNAVloans

NAVloansarethecounterparttocapitalcallfacilities:2Onceafundhasdrawn

downitsLPcommitmentsandmadeinvestments,itisatthispointthatfundscan

utilizeNAVfacilities,wherethecollateraloftheNAVfacilityisbaseduponafund’s

establishedportfolioofassets.3NAVloansaretypicallyestablishedduringorafter

afund’sinvestmentperiodandusedfromafund’sholdingperioduptotheendof

thefundlife.4Thesefacilitieshavevarioususecases,includingsupportingportfolio

companies,payingdownexistingportfolio-leveldebt,makingadd-onacquisitions,

or,morecontroversially,makingspeedierdistributionstoLPsindifficultmarkets.

1:“TheRiseofNAVLendinginPrivateEquity,”Moonfare,SeanLightbown,July6,2023.

2:Forfurtherinformation,readPitchBook’sQ32023AnalystNote:TheChangingLandscapeofCapitalCallFacilities.

3:ILPA’sNAV-BasedFacilitiesGuidancesays,“Duetotheiradditionalstructureandunderwritingcomplexities,NAV-basedfacilitiestendtohave

higherinterestratesthandosubscriptionlines.Thatsaid,becausethefacilitiesarecross-collateralizedacrossmultipleportfoliocompanies,NAV-

basedfacilitiestendtohavealowercostofcapitalthanthedebtasingleportfoliocompanywouldbeabletoincur.”

4:Somefundmanagersuse“hybridfacilities,”whichtransitionfromsubscription-line-basedfacilitiesovertoaNAVfacilityasthefund

acquiresassets.

2

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

SimplifiedexampleofcapitalcallfacilityusageversusNAVfacilityusageduringafund’slife

100

90

Asset1

acquired

Asset1

exited

80

70

60

Asset2

acquired

NAVfacilityis

putinplace

Asset2

exited

50

Asset3

acquired

Asset3

exited

40

30

Asset4

acquired

Asset4

exited

20

10

0

Asset5

acquired

Asset5

exited

Year0Year1Year2Year3Year4Year5Year6Year7Year8Year9Year10

InvestorcommitmentsNetassetvalue

Source:PitchBook

Priortotheglobalfinancialcrisis(GFC),NAVloanswereproductsofferedbybanks

totwoprimarytypesofborrowers:fundswithinthenascentprivatecreditmarket

andsecondariesfundswithportfoliosofLPfundinterests.5Loanstothesefunds

wereeasytounderwritebecausethediversificationofthesefundsmeantthatasset

volatilityandriskwerelow.IntheyearsfollowingtheGFC,however,regulatory

constraintsandcapitalrequirementsresultedinbankspullingbackfromoffering

portfolio-levelloans.Intheirplace,privatelenderssuchas17CapitalandHark

Capitalsteppedup.

TheCOVID-19pandemicbroadenedthebaseofborrowersthatstartedusing

NAVfacilities.BuyoutfundmanagersbeganemployingNAVfacilitiesas“liquidity

solutions”forportfoliocompaniesandassetsduringthepandemic.Useofthese

facilitieshasgainedfurthertractionthrough2024,asinterestrateshavedriventhe

priceofLBO-orasset-levelfinancingmateriallyhigher.NAVloanshavebecomea

mainstreamalternativetocompany-levelleverage,asthemorediversifiedasset-

basedloanwithalowerloan/value(LTV)ratiocouldjustifylowerborrowingrates.

Compoundingtheseeffectsisthefundraisingenvironment,which—duetoalackof

distributionstoLPsstartingin2022—hassloweddownsignificantly,affectingGPs’

abilitytoattractnewfundcommitments.

However,LPexperienceswithGPs’useofandtransparencyaroundthesefacilities

hasbeenincrediblyvaried.WhilesomeLPshavefoundGPsproactivelyforthcoming

arounddisclosuresregardingthesefacilities,othershavefoundthemselves

discoveringthepresenceofaNAVloanonlyafteranalyzingfinancialstatements

andworkingbackwardtodeterminethesourceofdiscrepancies.

5:Forfurtherinformation,readPitchBook’sQ42023AnalystNote:NAVigatingConsiderationsandControversiesAroundNAVLoans.

3

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

InthefaceofvaryingexperienceswithNAVloansandthepotentialforconflictsof

interest,ILPAsteppedintoofferguidancetotheindustry,consideringtheviewsof

LPs,GPs,andlenderstohopefullyprovideasolutionacceptabletoandadoptableby

allmarketparticipants.ThisNAV-BasedFacilitiesGuidancecomesatatimewhen

thereiswidespreadconfusionregardingwhenitisappropriateforfundmanagers

tousethesefacilitiesandinwhatcircumstancesGPsneedlimitedpartneradvisory

committee(LPAC)approval.Inaddition,becauseNAVfacilitiesarearelativelynew

productformostmarketparticipants,theconceptofportfolio-levelleverageviaa

NAVfacilityhasnotbeenexplicitlyaddressedinlimitedpartnershipagreements

(LPAs),makingitdifficultforbothLPsandGPstoknowthebestpracticesforan

instrumentofthiskind.

ILPA’sguidancesetsouttoinformbothLPsandGPsaboutNAVfacilitiesthemselves,

theirprosandcons,andwhatbestpracticesallpartiescanimplementtoensure

greatertransparency,smoothercommunication,andbettergovernance.ILPAalso

hopesthatprovidingthisguidancewillimproveeffortstostandardizefinancialand

performancereportingacrosstheprivatemarkets.

ILPA’sNAV-basedfacilityguidance

ILPA’sinsightsreflectfeedbackfromhundredsofLPsandGPsworldwideandcanact

asaroadmapforallmarketparticipants.Theguidancecontainsfivesections:

•“Part1:OverviewofNAV-basedfacilitiesandcurrentmarketpractices”

•“Part2:LPconcernsregardingNAV-basedfacilities”

•“Part3:RecommendationsforimprovedtransparencyandLPengagement”

•“Part4:Proposedlegaldocumentation”

•“Part5:RecommendeddisclosuresrelatedtotheuseofNAV-basedfacilities”6

OverviewofNAV-basedfacilitiesandcurrentmarketpractices

ThefirstsectiondiscussesalltopicsthatwouldfallunderaNAVfacilities101

chapter:educationalmaterialonhowNAVloansarestructured,howtheyarebeing

usedtoday,andtheirupsidesaswellaspotentialdrawbacks.Forinstance,this

sectiondiscusseshowthedualspecial-purpose-vehicle(SPV)structurecreated

whenaNAVfacilityhasbeenimplementedhasencouragedsomeGPstoexclude

theNAVfacilityfromfund-levelleveragecalculationstocircumventleveragelimits

inexistingLPAs.AsILPAstatesandlendershavereiterated,NAVfacilitiesshouldbe

consideredfund-levelleverage,andassuch,disclosuresmustbemadetotheLPACs

andarguablyallLPsbackingthefund.

6:“NAV-BasedFacilitiesGuidance,”ILPA,July25,2024.

4

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

LPconcernsregardingNAV-basedfacilities

ThesecondchapteriseducationalmaterialaimedatGPsregardingfivewidespread

LPconcernsaroundNAVloansandhowthesefacilitieshavebeenimplemented.The

guidancelistsmainfiveconcernsfromLPs:

•“LPsoftenhavelimitedinsightintowhenNAV-basedfacilitiesarebeingused.”

•“LPsstrugglewiththelackofgovernancerelatedtotheuseofNAV-based

facilities,whichdrivesthelackoftransparency.”

•“WheretheLPAissilent,GPshavetakendifferentapproachestohowtheytreat

NAV-basedfacilities.”

•“SomeGPshaveinterpretedtraditionalfund-levelleverageprovisionsinLPAsas

providingsufficientauthorityforthemtoundertakeNAV-basedfacilitieswithout

LPandLPACnotificationorengagement.”

•“LPshaveobservedincreaseduseofNAV-basedfacilitiesduringthemore

challengingfundraisingenvironmentsofrecentyears.”7

Thesecondchapteralsocontainstwospotlightsonspecificusecases.Thefirst

isonthecontroversialusecaseinwhichaNAVfacilityisimplementedtofund

earlydistributions.Accordingtotheguidance,theFundFinanceAssociationhas

estimatedthat20%ofNAVloanshavebeenusedforthispurpose,whichmakesLPs

nervous:“EarlydistributionsgeneratedbyaNAV-basedfacilitymayhaveamaterial

impactonIRRandDPIperformancefigures,sincecapitalisreturnedearlierthanit

wouldotherwisebeifaNAV-basedfacilitywerenotused.”8Inadditiontopotentially

manipulatingIRRanddistributions-to-paid-in(DPI)measurements,LPsalsotake

issuewiththefactthatwhenNAVfacilitiesareusedtofundearlydistributions,

LPsbearthebruntoftheinterestcosts.TheboosttoIRRitselfalsointroduces

conflicts,asGPsmaybeusingtheNAVfacilitytogeneratecarriedinterestupon

theseearlydistributions.

Additionally,theguidancesaysthat“giventhelackoftransparencyaroundthe

useofsuchfacilities,morevigilanceisrequiredtoisolatetheirimpact.”9Another

conflictaddressedinthisspotlightisthepotentiallyrecallablenatureofearly

distributions.Theguidanceexplainsthat“Ifthefacilitystartstounderperform

[…]GPscanrecallthedistributedcapitaltopaydownthefacility.Recallable

distributionscanalsobeanadministrativeburdenforLPsanddisrupttheircashflow

planning.ThepossibilitythatLPswillunexpectedlyneedtoreturndistributionsto

thefundimpactsLPs’abilitytoallocatethatcapitaltootherfundsorstrategies….”10

LPsshouldbeonthelookoutfordistributionsstemmingfromaNAVfacility.More

thanhalfofGPsrespondingtoourrecentlycompletedSentimentSurveyareat

leastconsideringimplementingaNAVfacilitytoprovideliquiditytoLPsinthenext

12months.

7:“NAV-BasedFacilitiesGuidance,”ILPA,July25,2024.

8:Ibid.

9:Ibid.

10:Ibid.

5

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

PitchBookSentimentSurvey:Whatisthelikelihoodyouwillusea

NAVloanforprovidingliquiditytoLPsinthenext12months?*

1%

13%

High

47%90

respondents

Medium

Low

Definitelynot

39%

Source:PitchBook•Geography:Global•*AsofJuly22,2024

Thesecondspotlightdigsintothelesscontroversialandmorewidelyaccepteduse

caseofNAVfacilitiesprovidingportfoliosupport.GPsthatuseaNAVloantofund

follow-oninvestmentsorpropupstrugglingcompaniesintheportfolioshouldhave

agoodrationaleasto1)whyitisprudenttodosoand2)whyaNAVfacilityisthe

bestoptionamongallpossiblealternativestoprovidethatadditionalcapital.LPs

shouldquestionwhetherornotGPshavemismanagedreserves,andGPsshould

bepreparedtoprovideatransparentrationaleregardingthefacility.Thisconcern

stemsfromthefactthatportfolio-supportingNAVfacilitiescross-collateralizethe

riskacrosstheotherassetsinthefund.Itmaybecheapertodoso,butifaportfolio

companysupportedbyaNAVloanendsupfailing,therestofthecompaniesinthe

fundwillhavetobeusedforcollateraltofootthebill.Lastly,LPsareencouragedto

beskepticalofGPsthatarestrugglingtoraisecapitalforafollow-onfundandusea

NAVloantosupportitspredecessor.Theguidancestatesthat“LPsareconcerned

thatstrugglingGPsmaybetakingoutaNAV-basedfacilitytoincreasetheirassets

undermanagement(andthereforetheirmanagementfeesifthemanagementfee

iscalculatedoncost).”11ManagersshouldbeawareofthechallengesthatLPshave

facedwithNAVfacilityimplementation.

RecommendationsforimprovedtransparencyandLPengagement

ThethirdsectioncoversILPA’srecommendationsforwhenandhowGPsshould

engagetheirLPbases.GPsshouldbeproactivelyapproachingtheirLPACsandbe

preparedtodiscusstheirrationalefortheprocess,thesizeandstructureofthe

facility,andkeyeconomicterms.IninstanceswheretheGPishopingtouseNAV

loanstogenerateearlydistributions,theGPshouldseekLPACapproval.LPsare

encouragedtoquestionwhyaNAVfacilityisabetteralternativetothevariousways

afundcangenerateliquidityforitsinvestors.

11:“NAV-BasedFacilitiesGuidance,”ILPA,July25,2024.

6

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

Proposedlegaldocumentation

ThenextsectiondetailsILPA’srecommendedlegallanguageinbothexistingand

futureLPAsregardingNAVloanfacilities.IntheinstancesinwhichanexistingLPA

doesnotgiveexplicitpermissiontouseNAVfacilities,theGPshouldapproachand

disclosethistotheLPACandrequestawaiver.Evenifexplicitlanguagedoesnotbar

thisborrowing,GPsshouldnotassumethattheycanmoveaheadwithaNAVfacility

withoutfirstconsultingtheLPAC.Inthecurrentfundraisingenvironment,apoorly

runprocessmaydissuadeLPsfromre-uppingtheircommitmentswiththefund

managerinquestion.

Forfuturenegotiations,ILPAofferssomelanguageinitsguidance.Itwillbe

importantforfutureLPAstoexplicitlydefineNAVfacilitiesaswellasappropriateor

inappropriateusecases,acceptablemaximumandminimumLTVratiothresholds,

andwell-articulatedleveragelimits.FutureLPAsshouldalsoclearlyoutlinewhena

GPmustconsulttheLPACpriortoenactinganydecisionsregardingNAVloans.

RecommendeddisclosuresrelatedtotheuseofNAV-basedfacilities

ThefinalsectiondiscussestheinformationthatLPsshouldbeseekingandthatGPs

shouldbedisclosingaboutNAVfacilitiesastheyarebeingcontemplated.Italso

includestwolistsofquestionsthatLPsshouldbeaskingtheirGPsandGPsshouldbe

askingtheirLPs.IntermsofinformationthatGPsshouldbedisclosingtoLPsabout

NAVfacilities,GPsshoulddisclosewhothelendersare,whattheLTVratiois,and

whatwouldhappentotheportfolioandunderlyingassetsintheeventofadefault.

WhileGPsmayuseaNAVfacilityagainsttheportfolioofafundonceorahandful

oftimeseveryfewyears,LPsareseeingmanyNAVfacilityusageproposalsacross

theirdesks,giventhemultiplemanagerstheseLPsworkwith.GPscanlearnbest

practicesfromthisguidanceandtheirownLPs,whoencountertheseproposals

frequentlyandcanprovideGPswithabroaderperspectiveonhowtheseloansare

receivedbyLPs.Assuch,thisguidanceisasmuchofavaluableresourceforGPsas

itisforLPs.LPsshouldfeelencouragedtosharethisguidancewiththeirmanagers.

AdditionalconsiderationsregardingLP/GPrelations

andnegotiations

ILPA’sNAV-basedfacilityguidancecomesatatimewhenLP/GPrelationships

appeartobedriftingfurtheroutofalignmentwitheachpassingnegotiation.From

whatILPAhasheardfromitsmembers,foryearsGPlegalcounselhasbeenmuch

moreaggressiveinpushingGP-friendlytermswitheachsuccessivefundraise.

LPAstodayarestartingfromamoreneutralposition—LPshavehaddifferentlevels

ofsuccessingettingGPstoenactcertainchangesthattheLPswouldliketosee.

WhileILPArecommendsfirsttryingtonegotiatethroughtheLPA,itisalsopossible

tointroducechangesinLPsideletters.ThegenerallylargerGPswithstellartrack

recordsstillwieldquitealotofnegotiatingpower,butforfundsthatarecompeting

tostandout,managershaveofferedfeeoffsets,managementfeebreaks,moreco-

investmentrights,andothersuchbenefits.

7

PitchBookAnalystNote:NavigatingILPA’sNAV-BasedFacilityGuidance

TogaugehowLPsarefeelingwithregardtowhetherthefundformationtermsin

themarketaremoreLPfriendlyorGPfriendly,wesurveyeddozensofLPsaspartof

ourrecentSentimentSurvey.Whilethetoughfundraisingenvironmentmightcause

sometoexpectthatthemarketiscurrentlyLPfriendly,LPsdonotnecessarilyfeel

thesameway.WhileagreaternumberofLPsfindthatnegotiationsinVCareLP

friendly,thisislesstrueacrossotherassetclasses.

PitchBookSentimentSurvey:Howdoyouperceivethepower

balancebetweenLPsandGPshasshiftedin2024?*

GPpowerhasincreased9%

11%

21%

24%

Nochange

LPpowerhasincreased

27%

44%

35%

52%

64%41%44%28%

VCPERealestatePrivatedebt

Source:PitchBook•Geography:Global•*AsofJuly22,2024

Onceafundisformed,theLPACplaysacriticalroleinrepresentingtheLPsin

thefund,andGPsaree