17Capital has taken a big step into the market for net-asset-value-backed lending.
The London-headquartered firm has partnered with a “significant” North American institutional investor to form a $1 billion NAV-based lending platform, according to a source with knowledge of the arrangement.
The name of the investor and the source of the funding is not clear.
The move will help the firm broaden its range of financing options away from preferred equity, for which it has raised €2.8 billion across four funds, according to data from sister title Private Equity International. It is currently in market targeting €1.8 billion for its fifth preferred equity fund.
Preferred equity and NAV-based lending facilities are both secured against cashflows from a portfolio of assets and can be extended without the need to precisely value the underlying assets. NAV-based facilities tend to be cheaper and count as a liability on the balance sheet.
“I think [the growth of NAV-based lending] will be similar to what we’ve seen in the subscription lines of credit market,” 17Capital managing partner Augustin Duhamel told Private Equity International in April. “Initially the facilities were subject to significant debate … Ultimately, SLCs became normalized because of the impact they have on fund performance – funds not using them are at a disadvantage.”
17Capital has hired several credit specialists over the past two years. In August last year it appointed Nomura’s Richard Golaszewski as a director in its New York investment team.
Other appointments included finance director Anthony McKay from CVC Credit Partners, managing director Stephen Quinn from Lloyds Banking Group and managing directors David Wilson and Emad Shahin from JPMorgan.
Wilson and Shahin followed Thomas Doyle, who joined 17Capital as a partner in September 2018. He led the creation of JPMorgan’s private equity fund financing business, as sister title Secondaries Investor reported.
17Capital did not wish to comment on the news.