Day 3: Can’t get enough NAV; Major insurer to start origination biz; FFA Awards

People: Investec’s Matt Hansford left the bank for a large insurer that wants to start an NAV origination business. More details here.

Fund Finance: There is lots to report from the main day of the conference – Rod and I will be filing some summaries of Thursday’s panels in the coming days. But here are some highlights from the event and color from the sidelines.

It may be a small market, especially compared to the $700 billion or more sub-line asset class, but NAV loans were the main talk of the day. Takeaways from panelists and one-on-one interviews with Private Funds CFO: there aren’t enough NAV lenders to satisfy demand; sponsors want even more innovation out of the instruments to cover more asset classes, as well as for leverage to be more seamlessly applied across the lifecycle of a fund.

Market professionals are always excitedly talking about the advent of more lenders offering hybrid subscription/NAV financing to that effect, but in reality offerings have been few and far between. One fund finance pro figures it will be a few years before sponsors can readily wrap up a revolver along with asset-level leverage and a NAV facility all in one go.

News of MassMutual’s impending entry into the NAV market could portend a major development on that front (see the above story on Matt Hansford’s move). The insurer’s access to capital is, in effect, endless, and MassMutual could go some way towards filling the demand/supply gap.

But where NAV facilities began life as, more or less, a defensive financing tool, they’ve found popularity as an offensive one since the covid crisis. The above finance pro said that some funds reporting impressive IRRs are still worried they won’t get top quartile if they don’t obtain a NAV facility and make a targeted, late-stage bolt-on or ‘tuck-in’ acquisition to further boost returns.

That means NAV loans are increasingly addressing a need similar to the one sub-lines were created to address: quick access to cash for quick deployment, lest a good acquisition opportunity be missed. Whether notoriously slow-moving insurers can help to fill that part of the demand/supply gap is a question yet to be answered.

In other news: The morning’s sessions included a brief awards ceremony recognizing important industry figures. Here are the individuals the Fund Finance Association recognized on Thursday:

Julian Black Lifetime Contribution to the Industry Award: Marcia Page, MPowered Capital (and co-Founder and executive chair of Värde Partners)

Dee Dee Sklar Women in Fund Finance Award:
Deborah Montaperto, managing director, private wealth adviser at Morgan Stanley Private Wealth Management

Diversity in Fund Finance Award: Donald Cooley, associate, Latham & Watkins

Next Gen Member of the Year Award: Shen Mei Bolton, senior associate, Ashurst

2021 Annual Contribution to the Industry – Legal: Jennifer Levitt, partner, Simpson Thacher & Bartlett LLP

2021 Annual Contribution to the Industry – Lender: Vicky Du, global head of fund finance, Standard Chartered

2021 Annual Contribution to the Industry – Sponsor: Edward Rabinowitz, managing director, Strategic Partners, Blackstone