NAV Lending

NAV lending (Net Asset Value lending) in the litigation finance context refers to credit facilities extended to fund managers or investors secured against the estimated net asset value of a litigation portfolio rather than against specific individual cases. The lender advances a percentage of the portfolio's marked NAV, providing the fund manager with liquidity without requiring case-level disposition. NAV lending is more common in private equity than in litigation finance, but it is an emerging structure as the asset class matures and portfolio marks become more standardized. The key challenge is that litigation portfolio NAV is inherently difficult to mark — case values are uncertain and illiquid — making lenders cautious about advance rates and requiring robust valuation methodologies.

Because litigation portfolio NAV is inherently difficult to mark given the illiquidity and uncertainty of underlying case values, NAV lenders apply conservative advance rates and demand robust, third-party-validated valuation methodologies before extending credit — a materially more cautious posture than NAV lending against liquid private equity holdings. This structure remains less common in litigation finance than in private equity precisely because the marking problem is harder to solve, making NAV lenders selective about which portfolios and managers they will extend credit to at all.