Financial sector on NAV market reportedly in optimal condition
In an exclusive interview with Stephen Quinn, partner at 17Capital, insights were shared about the growth of the Net Asset Value (NAV) finance market over the coming decade.
According to Quinn, the NAV finance market—a sector linked to lending secured by the net asset value of investment funds or portfolios—is poised for significant growth in the 2020s. This expansion is driven by increasing demand for flexible capital solutions by private equity funds, real estate funds, and other institutional investors.
Key growth factors include the rising assets under management (AUM) in private equity and real assets sectors, the growing acceptance of NAV-based lending as an alternative to traditional bank financing, and the increasing complexity and size of investment portfolios requiring specialized NAV financing products. Regulatory and capital efficiency considerations also encourage funds to use NAV finance to optimize balance sheets.
Typical growth rates for NAV finance have been above average compared to broader lending markets, often in the mid-to-high single digits CAGR (Compound Annual Growth Rate) globally over the decade. However, specific CAGR figures depend on region and market maturity.
Peter Hutton, head of NAV financing at Arcmont Asset Management, believes the current macro uncertainty, such as Trump Tariffs, is a significant tailwind for the adoption of NAV financing. He also notes that the market for NAV finance is predicted to grow to $145bn (£107.5bn) by 2030.
Luca Medizza, Protiviti managing director, expects the fund finance market in Europe to remain active throughout 2025. He foresees continued growth in three segments: refinancing of subscription lines for funds nearing extension periods, NAV and hybrid facilities used for distribution planning or interim liquidity, and solutions supporting continuation vehicles or illiquid strategies.
Moreover, Medizza points out that European private capital deal activity is showing recovery after the turbulence of recent years, with signs of uptick in mid-market private equity and a broader appetite for new transactions. Deal activity in European private capital is expected to remain strong, supported by continued interest in alternative financing structures such as NAV and hybrid facilities.
Goodwin's prediction is that the fund finance market will reach $2.5tn by 2030. As the NAV finance market makes up a key part of the growing fund finance market, it is expected to play a significant role in this projected growth.
In summary, the Net Asset Value finance market is expected to experience substantial growth over the next decade, driven by increasing demand for flexible capital solutions, the growing acceptance of NAV-based lending, and regulatory and capital efficiency considerations. The current market uncertainty and higher volatility are boosting demand for NAV facilities, and the European private capital market is showing recovery and a broader appetite for new transactions.
The growing acceptance of NAV-based lending as an alternative to traditional bank financing in the private equity and real asset sectors is a significant factor driving the expansion of the Net Asset Value finance market, which is predicted to reach $145bn by 2030. As a key component of the growing fund finance market, the Net Asset Value finance market is expected to play a significant role in reaching the projected $2.5tn fund finance market value by 2030, with the European private capital market demonstrating recovery and a broader appetite for new transactions.
