Four Ways Family Offices Can Utilize NAV Financing

Partner content by Alex Branton, Managing Partner at Nodem Capital.

According to Deutsche Bank Wealth Management’s 2025 Family Office Financing Report, 76% of family offices now borrow proactively to strengthen liquidity, rather than waiting until they face an immediate cash need.

This means they consider liquidity solutions such as Net Asset Value (NAV) financing a core part of their investment toolkit, working with specialist firms like Nodem alongside existing banks to secure bespoke, duration-matched facilities. 

How NAV loans work

NAV financing solutions function as subordinated debt (sometimes preferred equity) secured primarily by a private-market portfolio. 

Unlike traditional direct-to-company financing, the primary distinction is that leverage is applied at the diversified portfolio level rather than at the asset level, reducing both costs and risks. 

NAV facilities often utilise Payment-in-Kind (PIK) structures, meaning interest is capitalized and added to the principal rather than paid in cash monthly, which preserves liquidity for investments. 

Banks vs non-bank providers

NAV providers like Nodem step in to complement existing family banking relationships, working on portions of private portfolios that banks struggle to underwrite. 

Solutions are highly bespoke, often without cash interest, and sit subordinate (or alongside) existing banking facilities. ​

Family offices are using NAV facilities to replace loans that have fixed cash interest rates with PIK-based (duration-aligned) NAV loans to avoid the distorting pressure of frequent cash outflows that need to be funded by an illiquid portfolio. Here’s how that can work.

The Problem

A family office had an outstanding €50 million loan with a fixed cash interest rate of 6.5%. This recurring cash drain represented a major opportunity cost.

The Solution

The family office’s leadership sought a financing solution that would allow them to defer interest payments and redeploy the preserved cash into higher-return investments without selling core, long-term assets. They decided to refinance the €50 million loan with a 5-year Payment-in-Kind (PIK) based NAV loan. 

The 20% LTV (loan-to-value) facility required the family office to pledge a €250 million portion of its private investment portfolio as collateral. 

The Results

The 5-year facility term (with a 2-year optional extension) provided a clear window for the family office to execute its strategic objectives while preserving liquidity and avoiding quarterly cash interest obligations. 

The refinancing immediately eliminated the €3.25 million cash interest payments, resulting in a cumulative cash preservation of €16.25 million over the 5-year term. This capital was then available for reinvestment into higher-growth opportunities. 

The family office's decision was predicated on the belief that its reinvestment strategy would generate returns exceeding the PIK cost, with deferred payments allowing the family to pursue investments with higher return potential.

NAV loans provide non-dilutive capital that is accretive when the underlying asset's growth exceeds the facility's cost of capital.

The Problem 

A prominent European family office with a successful €200 million investment holding company aimed to accelerate its growth through new acquisitions. Their portfolio consisted of mature businesses, but the investment team found that securing financing for each new acquisition individually was expensive and inflexible (interest rates, cash-pay interest, and time-to-money).

The Solution

They secured a facility against the combined net asset value of their portfolio companies, allowing the investment team to obtain capital at a more favourable rate than individual company-level debt. 

To align with its conservative investment philosophy, the family office decided on a 25% LTV ratio. They secured a €50 million NAV facility, representing a 25% LTV against its €200 million portfolio. The facility had a 5-year term and a fixed Payment-in-Kind (PIK) interest rate.

The Result

The €50 million NAV facility provided the capital for a period of steady, controlled growth and the family office was able to act on attractive opportunities. The lower cost (and increased flexibility) of capital compared to individual loans enhanced the returns on its new investments. 

Over a 5-year period, the portfolio’s value grew 2x, significantly outperforming the organic growth that would have been achieved without the NAV facility.

NAV financing allows families to efficiently unlock value from mature investments, helping them meet new capital calls. 

The Problem 

A diversified European family office with a €300 million portfolio balanced between Venture Capital (VC) and Private Equity (PE) faced a sudden liquidity challenge. One of their top-tier VC funds issued a large, sooner-than-expected capital call to seize a rare investment opportunity in a company founded by a multi-unicorn founder. 

The family office received a €45 million capital call from its VC fund, due in 30 days. While the family office was confident in the investment, it did not have sufficient unallocated cash to meet such a large, unexpected call. The alternative—selling liquid assets or defaulting on the capital call—was highly unattractive. 

Defaulting would damage the family's reputation and result in the forfeiture of a potentially lucrative investment, while a forced sale of other assets could trigger tax liabilities and disrupt the portfolio's strategic allocation.

The Solution

They secured a €45 million NAV facility, representing a conservative 15% Loan-to-Value (LTV) against its €300 million portfolio. This facility was structured with a 5-year term and a fixed PIK interest rate. The low LTV ensured quick internal approval and favourable terms, while the PIK feature preserved the family's operational cash flow.

The family office's strategy was built on three layers of risk mitigation. (1) Immediate Liquidity: The NAV facility provided the instant cash needed to meet the capital call. (2) Primary Repayment Source: The anticipated distributions from the PE portfolio were earmarked for repaying the facility. (3) Secondary Repayment Source: The portfolio of other liquid assets served as a reliable fallback, ensuring the facility could be repaid even in a worst-case scenario where PE distributions were delayed.

The Result:

As expected, the PE portfolio began generating distributions, which were used to service and pay down the NAV facility. The loan was fully repaid within the planned 3-year window.

Families are using NAV financing to unlock liquidity for unexpected tax bills. They can also use it for lifestyle changes, relocation costs or property purchases. 

The Problem 

A well-diversified US family office with a large private portfolio suddenly faced an expected tax bill. The family had already leveraged its public portfolio and wanted to avoid anything drastic, such as a fire sale of its private assets. 

The Solution

A NAV facility is deemed to be mathematically superior to taking a 30%-50% discount on a hurried asset sale. The family’s bank would only offer a monthly interest loan, so they approached a NAV provider that could provide the capital via a PIK-based preferred equity solution, secured by the family’s broader portfolio, to meet the urgent tax bill. 

This also has the effect of providing sufficient runway to sell down assets in the secondary market in a timelier fashion to maximise prices. 

The Results

The family gained quick access to the exact amount of capital needed without short-term cash pay interest requirements associated with banking solutions. The family also appointed an advisor to wind down a portfolio of weaker assets in the interim to pay down the facility over the next 24 months. 

If a family office is looking to refinance, grow, rebalance or unlock liquidity, a NAV facility could be a fit, particularly if the office has:

If this is something of value, the best way to understand how much liquidity you could unlock from your existing private portfolio is to speak directly to a NAV financing specialist for a confidential, no-obligation portfolio review.

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Alex Branton is the Managing Partner at Nodem Capital, a leading investment firm that delivers tailored Net Asset Value (NAV) financing solutions to GPs, LPs, and Family Offices. The firm underwrites and provides facilities against complex baskets of illiquid global assets.

Led by Branton, a Cambridge Associates alumnus, Nodem Capital is authorised by the UK Financial Conduct Authority and backed by leading institutional investors, including the Lepercq Group. The size of their solutions ranges from $20m to over $100m.

Disclaimer: These examples are for illustrative purposes only and do not constitute financial or legal advice. The case studies presented are hypothetical and simplified illustrations of a complex financial instrument. It is not intended to be representative of all situations and should not be relied upon for investment decisions.