NAV Lending

NAV lending is a financing structure in which a lender advances capital against the net asset value of an entire fund's portfolio, rather than against a single, specific receivable or position, giving the fund liquidity without requiring it to sell down individual holdings. Applied to litigation finance and other legal-asset funds, NAV lending depends on the lender's ability to trust the fund's own portfolio valuation, which in turn depends on whether that valuation was built from calibrated, disclosed outcome and duration distributions across the portfolio's positions, or from a less rigorous internal mark that has not been independently validated. A NAV lender's diligence question is structurally similar to an equity holder's diligence question in a law firm equity context: how reliably can the portfolio's aggregate value, across many individual positions each carrying its own outcome and duration uncertainty, actually be estimated and monitored over time. NAV lending facilities for legal-asset funds are a natural extension of the borrowing-base discipline built for single-receivable financing, applied to an entire portfolio's distribution rather than to one matter at a time, and a lender extending NAV facilities to this asset class should expect the same re-scoring cadence and concentration monitoring a well-run borrowing base requires.