By Ross Dow, Director, Debt Finance, OakNorth

If there’s one thing this year’s fund finance events have demonstrated, it’s that the market is becoming much more aligned on its direction of travel. Conversations that once centred on whether products like NAV finance should be used are now focused on how to use them most effectively. That shift in thinking has implications for every fund manager considering their financing options.

Here are the five developments that best capture where fund finance is heading and what they mean for managers in the lower mid-market.

1. NAV has moved from specialist tool to standard toolkit item

If there was a single message consistent across every event this year, it was this: NAV finance is no longer a niche product used only at end of life. It’s part of the standard fund finance toolkit, and it’s increasingly discussed alongside acquisition finance in terms of how structural it has become.

The data behind that shift is straightforward. Global NAV lending has grown from under $20bn a decade ago to become a mainstream liquidity tool, with the total addressable market projected to reach $700bn by 2030.¹ The Haynes Boone 2026 Fund Finance Annual Report found that 72% of respondents expect moderate to significant growth in institutional NAV activity in 2026, supported by greater familiarity with the product and its ability to provide flexible liquidity solutions.² The Drawdown’s most recent Fund Finance Intelligence Survey, conducted with the LMA, showed 42% of borrowers expect their NAV facility borrowings to grow.³

The more interesting shift is the change in tone. Conversations moved away from whether NAV facilities are appropriate towards what they’re being used for, how they’re structured, and how proceeds are governed. That’s a mature market conversation.

The LP sentiment has shifted alongside it. gave fund managers a framework for having proper conversations with investors about NAV, and by this year’s events the tone had changed materially. LPs are no longer skeptical of NAV as a category. Some are actively encouraging its use or are using similar structures themselves. A number of LPs are running similar structures themselves to manage liquidity across their own portfolios- they understand the product because they are using it.

The dividend-recap style facilities that drew most of the criticism a few years ago are increasingly rare. What’s left is a product being used for follow-ons, bridge to exit and portfolio company support. All of that is easier to explain to an investor than a distribution-funded transaction.

2. Hybrid is quietly becoming the most interesting product in the room

For much of the past decade, fund finance has been framed as a choice between subscription lines and NAV facilities. That distinction is now starting to blur. Every event this year had at least one panel on the convergence between the two, and hybrid facilities (subscription line and NAV under a single credit agreement) came up more often, and with more conviction, than at any point I can remember.

The logic is straightforward for mid-life vintages. A fund with meaningful uncalled capital still to deploy, but with a portfolio that has begun to generate real value, doesn’t fit cleanly into either box. Running two facilities with two different lenders creates duplicated documentation, potentially conflicting security packages, and operational drag on the finance team. A single facility that draws on both sources of credit support, with covenants that transition sensibly through the fund’s life, is a materially cleaner answer.

At OakNorth we offer all three: hybrid, NAV and subscription. From the deals we’re seeing come through, the strongest use cases sit at the transition point in a fund’s life, where uncalled commitments still have value but the portfolio can do the heavier lifting on repayment. Continuation strategies fall naturally into this category. So do late-life vintages that are neither pure sub-line risk nor pure NAV risk.

3. The mid-market is where the real story is

The mid-market was a recurring theme across this year’s events. The message was consistent: it’s where much of the product innovation is happening, and where the biggest gap between financing needs and lender appetite still exists.

The story goes something like this. Big banks are structured for larger mandates. Their processes, documentation and minimum thresholds are calibrated for the top end. Mega funds are similarly structured for scale, and their pricing reflects it. Fund managers between roughly £50m and £1bn AUM sit in the gap. They have sophisticated financing needs and they’re increasingly clear-eyed about what they want. What they can’t easily find is a lender whose process and ticket size match their fund.

This is precisely the segment we target at OakNorth, with facilities from £3m to £75m. The panels I attended this year reinforced what we already believed. Mid-market sponsors want relationship-led lending, they prioritise execution certainty over headline pricing, and they engage earlier when they trust the counterparty. Sponsors who engage lenders at fund formation, rather than as a separate exercise once the fund is closed, tend to end up with facilities that are more useful and more flexible.

4. Banks and non-banks are settling into complementary lanes

There was a period a few years ago when the framing suggested that private credit would displace banks in fund finance. That’s not what this year’s events described. Every panel that touched on the bank versus non-bank question landed in roughly the same place: co-existence rather than competition, and increasingly co-lending.

The regulatory backdrop is driving most of this. Basel 3.1 in the UK, CRR3 in the EU, and the PRA’s ongoing focus on private markets have collectively made certain kinds of lending less economic for banks, and other kinds more so. The European Banking Authority’s clarification on private ratings has pushed the market towards external ratings for regulatory capital purposes. The effect is that banks are becoming more selective about where they deploy capital, and where they do, they’re doing so at the senior, secured, diversified end of the spectrum. Private credit is picking up the concentrated, higher-LTV, higher-return end.

The consequence is that facilities are increasingly stitched together across the capital structure. First-out bank tranches with private credit taking the subordinated piece. Senior secured NAV from a bank sitting behind mezz from a credit fund. This is a healthier market structure than the “one lender does everything” model that preceded it, and it plays to what banks like OakNorth are good at. Our positioning is deliberately senior, deliberately conservative on leverage, and deliberately focused on diversified underlying portfolios. That’s the profile the regulation is pushing banks towards, and it’s where the risk-adjusted return actually works for us.

5. Valuation governance is where the real work happens

Valuation was on the agenda at every event this year, and the conversations were more granular than they used to be. Challenge rights, cash sweeps, borrowing-base eligibility, cure periods, hard versus soft LTV breach, cost allocation of independent valuations. All of it discussed in detail.

Here’s what I’d take from all of it. The valuation governance framework in a modern NAV facility is extensive. And yet the actual mechanisms (challenge rights, cure periods, valuation disputes) are almost never invoked. I’ve not had to invoke a valuation challenge on any facility we’ve written. Most of the lawyers I know who draft these documents have never seen one done in practice. The mechanisms do important work by existing. They set expectations, create pressure release, and give both sides a framework for the very worst case. But the actual resolution, when a portfolio mark moves in a way that surprises the lender, is a phone call with the GP.

Which is why the real work happens at underwriting, not enforcement. Building conviction in the GP’s process, the quality of their reporting, the transparency of their information rights, and the alignment of their interests with LPs. If that groundwork is right, the valuation governance mechanisms in the facility become the rarely used safety net they were intended to be. If it isn’t right, no amount of documentation fixes it.

Where I think this goes next

If I had to summarise this year’s conversations in one sentence: NAV finance is normalising, hybrids are gaining ground, the mid-market is where the growth is, banks and non-banks are learning to co-exist, and valuation governance is settling into a mature framework. None of these are dramatic shifts. All of them compound.

For managers considering their financing options over the next twelve months, the practical implications are straightforward. Engage lenders early, ideally at fund formation. Be clear about the use case. Choose a lender whose process, ticket size and product range genuinely match your fund, rather than adapting to whoever happens to be available. And if you’re operating in the mid-market and haven’t looked at what a specialist bank can now do for you, it’s worth a conversation.