Davis Polk partners Meyer Dworkin and David Kennedy and counsel Kwesi Larbi-Siaw were featured in Private Debt Investor discussing how an expanding borrower universe and new entrants on the lending side are driving innovation in fund finance.

When asked about the key trends in the fund finance market today, Meyer noted, “The main trend right now is the increased number of players, both on the lender/investor side and on the borrower/sponsor side.”

Kwesi added, “A related trend on the lender side is the continued use of syndication around these loans. In the past, NAV facilities were mostly a bilateral product, but we now see banks bringing in other lenders, often post-closing, due to the larger size of the facilities.”

Discussing the increase in innovative structures, David said, “That is a function of the increased competition, particularly from established and new private credit funds in this space. This competition benefits borrowers as it increases access to NAV facilities for fund complexes that are not set up in a way that commercial banks can easily lend to them.”

Meyer noted, “Historically, different parts of the fund finance market used to be more isolated from one another, with separate providers of subscription lines and NAV facilities. This is now changing. Lend­ers and borrowers see the advantages of capitalizing on existing relationships to expand their product mix, so there is now much more crossover among pro­viders offering a broader suite of prod­ucts.”

Speaking about common legal complexities in NAV facilities, Kwesi said, “In terms of the collateral struc­turing, in collateral-light deals where lenders’ security packages are limited to a pledge of accounts, lenders need to find ways to protect themselves in an enforcement scenario. We spend a lot of time trying to figure out whether there can be ad­ditional support given via some form of fund-level guarantee.”

Describing the lender landscape, David explained, “In the past six months, we have seen a number of commercial banks look to broaden their fund finance product offerings from predominately subscription lines to a wider range of fund-level facilities, including NAV facilities. We have been working with them to help them create investment and credit policies to allow them to enter the market with a broader set of fund financing solutions.”

“Supply, demand and creativity drive fund finance innovation,” Private Debt Investor (September 1, 2025)

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