TOOLS
Login to access your documents and resources.
At-a-glance
| INVESTS ACROSS |
|
Overview
NAV Financing seeks to provide secure, flexible capital to European and U.S. middle market Private Equity Sponsors, looking to enhance value creation and increase equity returns. This innovative financing approach involves lending, cross-collateralized by a diversified portfolio of assets.
Strategy highlights
- Attractive Risk-Return Profile: The strategy targets investment grade risk while seeking to deliver attractive direct lending returns through conservative loan-to-value ratios typically up to 25%, with a strong focus on downside management. The fund-level lending approach provides diversification benefits through portfolio effects that can mitigate single asset risk.
- Competitive Market Position: Arcmont brings distinctive competitive strengths including extensive sourcing capabilities with 1,200+ sponsor relationships, deep asset knowledge from reviewing ~15,700 investment opportunities globally, and specialist NAV expertise combining bottom-up credit analysis with LP insights and Churchill's secondaries sector perspective.
- Robust Risk Management: The strategy employs comprehensive downside management measures including cash flow sweeps, covenants, security packages, and margin ratchets. The time-tested underwriting rigor, backed by €35 billion deployed over multiple cycles, ensures disciplined credit approach with in-depth due diligence.
- Enhanced Alignment: Fund-level lending creates alignment of interests with sponsors compared to asset-level financing, as PE sponsors face higher franchise risk. This structure, combined with lower individual company default risk given the diversified collateral base, provides attractive returns opportunities with low volatility and contractual floating rate returns that hedge against inflation.
Related articles
Churchill Asset Management explores middle market private credit opportunities, GP solutions, and why discipline and manager selection matter most in 2026.
Churchill Asset Management's Nick Lawler explores how GP-led secondaries and continuation vehicles are reshaping private equity portfolios.
Trace the rise of European direct lending from its origins in Michael Milken's 1980s junk bond revolution to today's record-breaking market. Discover how a handful of pioneering firms—Ares, ICG, Hayfin, and Arcmont—transformed from private equity's "last resort" into their "first port of call," now dominating nearly half the market they helped create in the aftermath of the 2008 financial crisis.
