Net asset value (NAV) financing, debt raised by private equity funds secured against whole portfolios of companies, has grown fast in recent years, as managers of those funds struggle to sell companies at higher prices than they paid for them.
The addition of yet more borrowing onto a business already built on high leverage is a growing worry for investors in PE funds and for regulators.
PE managers now have to hold companies for longer than they used to: maybe six to seven years rather than the three to five they promised investors when they raised funds.
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