In a recent ION Influencers fireside chat, Ari Landsberg, Managing Director at 17Capital, detailed on how Net Asset Value (NAV) financing has evolved from a niche tool to a permanent, strategic layer in the capital structure of the world’s largest buyout firms.

With over a decade of experience and $17+ billion deployed, Landsberg positioned 17Capital not just as a lender, but as a critical “investment banking” partner solving the most complex challenges facing GPs today—from succession planning to fueling growth in a constrained liquidity environment.

Here are the key topics and takeaways for GPs, LPs, and finance professionals.

The Dual Engine: GP Solutions and Fund-Level Credit

Landsberg framed 17Capital’s approach around two core, interconnected product lines that cater to different needs within a private equity firm:

1. Strategic Lending (GP Solutions): Financing the management company itself. This includes loans against:

   • Management Fees: Predictable revenue streams (often serviced by banks).

   • GP Commitments: The “largest unmet need”—financing the founders’ own capital tied up in their fund commitments.

   • Unrealized Carry: The future incentive fees from unsold assets.

2. Fund-Level Credit: Providing capital to the fund, typically 3-5 years after its final close, to maximize flexibility for follow-on investments, platform add-ons, or optimizing exit timing. “NAV has earned its place as a permanent part of the fund capital structure much like subscription lines did fifteen years ago.”

Solving the Founder’s Dilemma: Succession and Wealth Illiquidity

A central theme was the sensitive, high-stakes role NAV financing plays in GP succession—a problem PE founders are often better at diagnosing in their portfolio companies than in their own firms.

• The Problem: Founders have built vast “wealth on paper” but face a liquidity crunch as slower realizations from their funds make it harder to fund new commitments or monetize their stake.

• The Solution: Landsberg described a nuanced, trust-based advisory process. By first helping with GP commitment financing and enabling junior partner economic participation, they lay the groundwork for the ultimate succession conversation. The goal is to allow founders to “extract that wealth and leave the company that you founded on good footing.”

• The GP Profile: 17Capital is “self-selective,” focusing on large, blue-chip managers with institutional processes, transferable underwriting, and a robust investment committee—not overly reliant on a single “key man.”

The Market Landscape: Consolidation, Emerging Managers, and the “Squeezed Middle”

Landsberg provided a clear-eyed view of the evolving GP ecosystem:

• The Rise of Emerging Managers: Contrary to expectations, many “first-time fundraisers” are launching with impressive, institutional-scale funds, often spun out of large platforms. This is creating a new and growing opportunity for specialized lenders.

• The “Squeezed Middle” Myth? While it’s tough for smaller generalists, Landsberg identified a resilient group: the “smaller mega-caps”—brand-name firms with 10+ vintages of strong performance that haven’t ballooned into $20B+ funds. “Performance really will dictate those that aggregate assets.”

• Consolidation Plays: While major PE consolidation is limited, 17Capital is active in financing larger alternative asset managers (including public names) as they acquire niche firms, particularly in the private credit space, to diversify their fee streams.

The Sourcing Advantage: Relationships in an “Episodic” Market

Success in NAV lending hinges on timing and trust, as GP needs are “opportunistic and episodic.”

• A Relationship-Driven Machine: 17Capital’s large team of senior professionals (30+ investment staff) conducts “robust and interconnected” sourcing, with dedicated coverage for major financial hubs. The goal is to be the known, trusted capital partner before the urgent need for a succession solution or fund recapitalization arises.

• The LP Perspective: Landsberg noted that as top-tier GPs increasingly adopt NAV financing, their LPs (including secondary funds) have grown to accept it as a legitimate, strategic tool. “It’s helped situate it as a solution set that’s here to stay.”

The Investor Pitch: Why Blue-Chip GPs Pay a “Premium”

Addressing a key LP question—why would massive, well-connected GPs use 17Capital?—Landsberg pointed to a structural market ineacity.

• The Regulatory Gap: Large banks are constrained from heavy allocation to illiquid, long-term lending. This creates a “massive growing tailwind” of demand from private allocators that only flexible private capital can meet.

• Accretive Arbitrage: For a GP, the cost of capital is trivial compared to the strategic value it unlocks—whether funding a transformative acquisition of another manager or securing the firm’s legacy. “The cost of capital pales in comparison to how accretive it is from an investment perspective.”

Key Takeaways for the Industry:

• For GPs: NAV financing is no longer just for emergencies. It’s a strategic tool for growth, succession, and partner alignment. Building relationships with top providers before you need them is critical.

• For LPs: Understanding a GP’s use of NAV financing—whether for growth or succession—is now a key part of due diligence. It signals sophisticated capital management.

• For Talent: NAV lending has shed its niche status, now attracting top talent from banks and PE firms. It combines complex structuring with deep client relationships in a high-growth sector.

• The Bottom Line: As private markets mature and liquidity dynamics shift, NAV financing has become the indispensable capital engine for the private equity industry, solving its most fundamental challenges from the inside out. Firms like 17Capital that combine advisory depth with flexible capital are positioned at the very center of this transformation.

Key timestamps:

00:09.44 Introduction to the Fireside Chat
01:09.38 Ari’s Career Journey
01:53.61 Advisory Approach in Asset Management
02:28.81 Current Solutions for Managers
03:52.39 Succession Planning Challenges
06:04.17 Financing Options for Management Companies
07:23.81 Guiding Managers Through Succession
09:19.25 Financing Eligibility for Managers
10:36.62 Defining Track Record in Asset Management
11:33.25 17Capital’s Role in Fund Lifecycle
15:15.53 Consolidation Trends in Asset Management
16:43.61 Emerging Managers and Financing Opportunities
18:37.67 The Future of Middle Market Managers
20:28.20 Talent Movement in Asset Management
22:01.43 Investor Questions and Market Dynamics
23:45.89 Conclusion and Closing Remarks