💼 Assigning Lending Value 💵 to Private Equity Fund Interests: Why Private Banks Must Act Now

By WealthVision ProGPT | Fintech Café Editorial |

November 2025

🌍 1. The Liquidity Gap in Private Markets

Private markets have grown exponentially, with global private-equity (PE) assets under management surpassing $10 trillion as of mid-2023 (Preqin, cited by Oaktree). Yet liquidity for investors remains scarce.

For many HNWIs and UHNWIs, a substantial share of their wealth is tied up in PE fund commitments—illiquid by design. At the same time, startup and growth ecosystems depend on stable capital commitments from these very investors.

👉 The opportunity: Private banks can unlock liquidity by lending against PE fund interests (LP interests). This allows investors to access capital without selling at a discount—while supporting the real-economy funding cycle.

🏦 2. The Current State of Play

💳 Lending Against PE Fund Interests

NAV-based or LP-interest financing is gaining traction across global wealth centers.

UBS explicitly notes it may lend against private-equity limited partnership interests to help clients manage capital calls and liquidity. The Institutional Limited Partners Association (ILPA) released formal guidance in 2024 to improve transparency and governance for NAV-based facilities.

📊 Market Size (Verified)

Preqin (2023): NAV financing market estimated at ~$44 billion, projected to reach ~$145 billion by 2030. Partners Group (2025): places the current NAV financing market around $100 billion. Academic scenarios extend as high as $700 billion by 2030, but these are model projections, not consensus estimates.

➡️ Interpretation: While forecasts vary, all credible sources point to strong double-digit annual growth in NAV-based lending.

🧩 Typical Loan-to-Value (LTV) Parameters

Specialist lenders such as 17Capital indicate LTVs generally range up to ~30 %, with conservative underwriting by traditional banks often in the single-digits to low-20 %.

💡 3. Why It Matters — Value Creation Across the Ecosystem

👤 For Private-Bank Clients (HNWIs / UHNWIs)

💧 Liquidity without selling: Access capital while preserving upside. 🔁 Capital recycling: Redeploy proceeds into new vintages or direct deals. ⏱️ Capital-call management: Avoid defaulting or missing drawdowns.

🏦 For Pension Funds & Institutional LPs

⚖️ Smooth cash flows: Use NAV facilities to manage distributions and obligations. 🧱 Avoid distressed secondaries: Retain exposure during market dislocations. 🕰️ Alignment with long-term strategy: Maintain allocations through cycles.

🚀 For Startups & Fund Managers

💡 Stable fundraising: Fewer LP defaults or delayed capital calls. 🪴 Portfolio support: Funds can deploy follow-on capital confidently even during slow exit periods.

💬 For Banks & Credit Providers

💼 New, secured revenue streams backed by diversified portfolios. 🤝 Deeper client relationships and competitive differentiation. ⚠️ Regulatory focus: The UK PRA (2024) review highlights growing supervisory attention to PE-related bank exposures, including NAV and LP-interest loans.

🧭 4. Guardrails & Best Practices

To ensure transparency and resilience, ILPA’s 2024 guidance recommends that lenders and fund managers:

✅ Define “NAV-based facility” clearly in fund agreements (LPAs)

✅ Disclose purpose, size, cost, tenor, LTV, collateral, and covenants to LPs

✅ Seek LP Advisory Committee (LPAC) consultation for material facilities

✅ Maintain conservative LTV caps (typically ≤ 30 %) and robust collateral diversification

✅ Align borrowing with genuine portfolio-support needs, not cosmetic performance boosts

When structured prudently, these loans unlock liquidity while preserving investor alignment and fund integrity 🔓💡

🔮 5. Strategic Roadmap for Private Banks

🧠 Build specialist expertise in PE structures and NAV valuation. 🏗️ Design an LP-interest lending product tailored for private-bank clients. 📊 Integrate credit & investment planning within the same client conversation. 🤝 Collaborate with fund-finance specialists (e.g., 17Capital, Oaktree) for syndication. 🛡️ Apply risk-governance frameworks—LTV limits, collateral monitoring, stress testing. 🎓 Educate clients on costs, risks, and regulatory context. 🏛️ Extend selectively to family offices and institutional investors.

🪙 6. The Future Outlook — A Win-Win-Win

🌟 Private banks: Expand high-margin secured lending and strengthen relationships.

🌟 Investors: Gain flexibility and liquidity while remaining fully invested.

🌟 Pension funds: Manage commitments and avoid forced sales.

🌟 Startups: Benefit from steadier capital inflows.

With credible forecasts showing NAV financing could more than triple by 2030, early movers among private banks will lead the next phase of wealth-backed credit innovation 🚀

✅ 7. Conclusion — Act Before Clients Ask

If you oversee private-bank credit, wealth strategy, or fund-finance advisory, the time to act is now.

💬 Establish a transparent, risk-calibrated LP-interest lending framework aligned with ILPA principles. It’s not just about credit—it’s about enabling liquidity that fuels innovation.

#PrivateBanking #WealthManagement #PrivateEquity #NAVFinancing #PrivateCredit #FamilyOffices #PensionFunds #AlternativeInvestments #VentureCapital

📚 Sources

UBS, Lending Overview for Private Clients (2024) ILPA, NAV-Based Facilities: Guidance for LPs & GPs (2024) Preqin (2023), Fund-Finance Market Data Partners Group, Perspective (Jan 2025) 17Capital, NAV-Based Financing Overview (2024) Bank of England / PRA, Supervisory Letter on Private-Equity-Related Financing Activities (Apr 2024)