Case Studies: How Liquid LP's NAV Loans Benefit Investors in Various Asset Classes
As a leader in providing liquidity through NAV (Net Asset Value) loans at Liquid LP, we have a track record of assisting individuals and institutional investors in maintaining financial flexibility while preserving their strategic investments. Here’s how we have helped three investors across different asset classes.
1. Private Equity - Meeting Capital Calls with Confidence
Background:
A large institutional investor in a mid-sized private equity buyout fund, found themself in need of liquidity to address unforeseen capital calls in other investment ventures. Faced with the dilemma of either selling its stake at a discount or disrupting its broader investment strategy, the limited partner wanted a more strategic solution.
Structure:
Liquid LP provided a NAV loan secured against the limited partner’s interests in the private equity fund. The loan was structured based on the value of the underlying portfolio companies, which were mature and generating significant cash flow. By leveraging the value of these assets, the LP was able to access the necessary liquidity without liquidating its fund interests.
Outcome:
The LP successfully met its immediate capital needs while retaining full exposure to the potential upside of the private equity fund. The loan was repaid over time through distributions from the fund, allowing the LP to navigate market volatility without resorting to forced sales or compromising its long-term investment strategy.
2. Venture Capital - Seizing New Opportunities While Preserving Growth
Background:
An LP invested in a growth-stage venture capital fund faced an exciting new investment opportunity but was reluctant to exit its existing VC commitment prematurely. Given the high growth potential of the VC fund’s portfolio companies, the LP needed a way to secure additional liquidity without compromising its existing stake.
Structure:
Liquid LP provided a NAV loan against the LP’s stake in the venture capital fund. Considering the high-risk nature of venture capital investments, the loan was structured with a conservative approach, including a lower loan-to-value (LTV) ratio. This structuring provided the LP with the necessary capital to pursue the new investment opportunity while preserving its commitment to the VC fund.
Outcome:
The LP successfully capitalized on the new investment opportunity without divesting from the high-growth VC fund. As the portfolio companies within the VC fund matured and increased in value, the LP utilized the distributions to repay the loan, thereby maintaining its long-term investment strategy and benefiting from the future upside of both investments.
3. Private Credit - Optimizing Portfolio Allocation with Stable Cash Flows
Background:
A pension fund, acting as an LP in a private credit fund specializing in direct lending, sought liquidity to reallocate part of its portfolio to a different asset class. Given the fund’s stable and consistent cash flows but relatively illiquid nature, the pension fund required a solution that would enable it to achieve its reallocation goals.
Structure:
Liquid LP provided a NAV loan secured by the pension fund’s investment in the direct lending fund. The loan was structured with a higher LTV ratio, reflecting the stable income generated by the underlying loans in the fund’s portfolio. This approach allowed the pension fund to access a significant portion of its invested capital as a loan.
Outcome:
The pension fund successfully reallocated its capital to new opportunities while retaining its investment in the direct lending fund. The loan was serviced through ongoing income distributions from the fund, allowing the pension fund to optimize its portfolio and enhance its liquidity without sacrificing its stable cash flow.
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