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Ways for GPs to find capital in tight liquidity environment, Consonance Capital explores emerging healthcare trends in pandemic, LACERS sees big rise in capital calls

Consonance Capital Partners wraps up its sophomore fund after only three months of fundraising and Virginia Retirement System will be fast-tracking its increased private equity target allocation due to the coronavirus.

Happy Thursday!

Here in New Jersey, the Governor is opening up large state parks (not playgrounds). So we’re looking forward to actually driving somewhere this weekend. Exciting times!

NAV: Been hearing a lot about NAV-lending as a way for GPs to secure capital to support portfolio companies through the downturn. NAV-based loans are more common in credit funds, where they are secured by the net asset value of the portfolio, as opposed to just one investment.

“As a lender, your credit is the value of the whole fund, not just one company, so it’s safer,” said Doug Cruikshank, head of fund financing and Hark Capital at Aberdeen Standard Investments. I recently spoke with Cruikshank about such lending facilities, which Hark provides.

Hark has seen its NAV lending business grow in the downturn, Cruikshank said. NAV facilities can be used to support specific investments in a fund (backed by the NAV of the whole fund), or can be lent to back the full fund, he said.

The vital aspect for many managers right now is liquidity. Even investments that were growing before the downturn are in danger of collapse if they run out of money. “If you run out of money, you’re dead, and if you die, it doesn’t matter how much potential upside you had in terms of value,” Cruikshank said.

Liquidity is tight as GPs draw down commitments for investments and to pay off credit lines, so any method that can attract more capital to portfolio companies is getting a close look. NAV facilities are generally for mid-life funds that have active portfolios but not much capital left to support investments.

Issues: NAV loans get in trouble if performance of the underlying assets degrades, while the borrower is still on the hook to pay back the loan. This can get dicey in cases of older funds that have exhausted capital reserves.

And while NAV-loan lenders have the cushion of the entire portfolio backing their loans, when the entire market collapses like what happened in March, problems can arise, according to a fund finance attorney.

Some NAV facilities came under pressure after the markets dropped due to the pandemic lock down, the attorney said.”People are having to refinance their NAV facilities … they’re drawing down their subscription lines to help to repay those NAV facilities,” the attorney said.

What are you seeing in the world of NAV-lending or other ways GPs are seeking liquidity? Hit me up at

Cappy calls: LACERS CIO Rod June reported a big increase in capital calls, Justin Mitchell reports on Buyouts today, which is consistent with what we’ve been hearing from sources and surveys over the past few weeks. So what are GPs spending money on right now, with deal activity at a near-standstill as buyers and sellers try to come to agreement on valuations?
Well, they’re finding opportunities to invest at lower valuations, June said. A lot of that deal activity, from what we’ve seen and heard from sources, involves add-ons that GPs are finding at great prices to build platforms. And they’re paying off subscription lines of credit, June said. Check out Justin’s story here.

Top Scoops
Consonance Capital Partners closed its sophomore fund on $856 million after only three months on the market, writes Sarah Pringle on PE Hub. Fund II will target eight to 12 platform investments in lower middle-market healthcare businesses generating between $25 million to $500 million in revenue.
Consonance is keeping tabs on emerging trends in the public health crisis, whether across the supply chain, logistics, workforce training or telemedicine. “We’re looking at this through the lens of: How can we help out? Where does the system need help? And then, what changes to the healthcare system are happening that were catalyzed by this that we think are potentially longer-term trends,” said Benjamin Edmands, managing partner and co-founder of Consonance. Read it here on PE Hub.

Virginia Retirement System approved a plan to fast-track its increased private equity target allocation due to the coronavirus, writes Justin Mitchell on Buyouts. The pension decided to jack the target to 13 percent from 11 percent last year. But recently, its actual allocation rose to 13.7 percent because of the collapse of public market valuations. The board decided to adjust the target to rebalance. Read more.

Have a great day! Reach me with your thoughts, tips, gossip, whatever at, on Twitter or find me on LinkedIn.