Doug Cruikshank, managing partner and founder of Hark Capital, discusses how NAV loans are helping private equity firms unlock liquidity, manage longer holding periods, and support portfolio growth in today’s evolving market.
Private equity funds are lasting longer than ever. Years ago, a 10-year fund was typically wound down in seven or eight years, thanks to quick exits and strong market activity. Today, many funds are approaching or surpassing their initial 10-year term without completing all portfolio exits, creating challenges for both general partners (GPs) and limited partners (LPs).
“Funds that were raised in 2016, 2017 and 2018 are finding themselves in year seven, eight or nine, with assets that still need more time,” says Doug Cruikshank, managing partner and founder of Hark Capital, a firm specializing in net asset value (NAV) lending. “And because of the slower exit environment, many GPs are looking for creative ways to support their portfolio companies and deliver liquidity to their investors.”
The Rise Of NAV Lending
NAV loans—credit facilities secured against a fund’s portfolio of assets—have emerged as a vital tool for private equity firms facing extended holding periods. These loans allow GPs to access liquidity without having to sell assets prematurely or dilute equity.
According to Cruikshank, “NAV loans provide flexible, non-dilutive capital that can be used for a variety of purposes—from supporting portfolio companies and funding add-on acquisitions to returning capital to LPs or bridging to exits.”
Historically, NAV lending was a niche strategy, but as exit activity has slowed and interest rates have risen, it has become a mainstream financing option. “In 2013, when we founded Hark, hardly anyone was talking about NAV loans,” Cruikshank recalls. “Now, it’s an accepted and increasingly important part of the private equity toolkit.”
Strategic Applications
The use of NAV loans varies depending on a fund’s strategy and stage. Some sponsors use them to provide growth capital for portfolio companies, while others leverage them to refinance existing debt or to deliver early distributions to investors.
“There’s no one-size-fits-all approach,” says Cruikshank. “Each facility is structured around the specific needs of the fund and the nature of its assets. The goal is to provide flexibility—allowing GPs to be proactive rather than reactive.”
This flexibility can be particularly valuable in volatile markets. By unlocking liquidity tied up in portfolio assets, NAV loans give sponsors the breathing room they need to support performance and optimize exit timing.
Market Maturity And LP Alignment
As NAV lending has matured, so too has the understanding and acceptance among LPs. “Initially, there was some skepticism—LPs wanted to know how these facilities would affect returns and risk,” Cruikshank notes. “But with greater transparency and communication, most LPs now see the value in using NAV loans to protect and enhance portfolio value.”
Cruikshank emphasizes the importance of alignment and disclosure. “We always encourage full transparency with LPs,” he says. “When used responsibly, NAV loans are a win-win—they can improve outcomes for both the GP and the LP.”
Looking Ahead
With fund durations lengthening and capital markets still uneven, NAV-based financing is expected to remain a key liquidity solution across the private equity landscape. “We’re seeing NAV loans evolve beyond temporary fixes,” says Cruikshank. “They’re becoming a structural part of how funds are managed—providing optionality and stability through different market cycles.”
As the industry continues to adapt, Cruikshank believes NAV lending will play an increasingly strategic role. “Ultimately, it’s about giving managers more tools to manage through uncertainty and deliver consistent value,” he says. “And that’s exactly what this market needs right now.”
