In PEI Article, Akin Gump Lawyers Look at Use of NAV Facilities in Emerging Markets
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Private Equity International has published “NAV facilities’ potential in emerging markets,” an article by Akin Gump partners investment management partner Aleks Bakic and corporate partner Amy Kennedy and senior counsel Karen Ireland. The article looks at how emerging markets general partners (GPs) can use net asset value (NAV) facilities to address both reduced liquidity and a challenging fundraising environment.
Many GPs, the authors write, “use the proceeds of NAV facilities to affect a dividend recap, accelerating distribution to paid-in for investors and helping to improve internal rate of return.” In emerging markets, they say, this can be “particularly attractive.”
The article notes note that NAV facilities provide “an alternative source of funds to finance portfolio acquisitions, follow-on investments and capital expenditure, as well as effecting asset-level refinancings and restructurings.” GPs should be careful though, the authors warn, of certain factors that are “peculiar to emerging markets funds.”
The authors conclude by noting that NAV facilities “are a flexible tool whose structure and provisions can be adapted on a deal-by-deal basis to address the specific needs of the borrower.” In the end, they predict “a continued expansion in the number of emerging markets funds that will utilize the benefits of such facilities.”
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