Group 1 - Large institutional investors are turning to Net Asset Value (NAV) loans to alleviate cash shortages amid a freeze in trading markets, reflecting liquidity challenges in the private equity sector [1][2] - Recent data indicates that private equity funds have distributed only half of the historical average to investors over the past three years, leading to a record backlog of $3 trillion in unsold private equity transactions [2][3] - The cash shortfall that should have been returned to investors is estimated to be between $400 billion and $500 billion [2] Group 2 - NAV loans are viewed as an alternative to selling private equity stakes in the secondary market, allowing investors to access cash without selling at a discount [3][4] - These loans typically have a term of four to five years with a loan-to-value ratio of about 20%, making them attractive to buyers like insurance companies and private credit funds [3] - However, NAV loans require cross-collateralization, which poses risks to the entire fund's investments [3][4] Group 3 - Family offices and sovereign wealth funds, in addition to pensions and endowments, are also utilizing NAV loans, with the largest loan size reaching approximately $800 million and expected to exceed $1 billion soon [4] - Firms like 17 Capital, Carlyle, and Ares Management are among the most active providers of NAV loans [4] - As liquidity pressures in the private market persist, NAV loans may become increasingly relied upon by large institutional investors, introducing new systemic risk considerations [4]