NAV loans have been under the spotlight of late. But Oaktree majority owned 17Capital – a NAV loan specialist – says the use of these loans by GPs to make distributions to LPs fell a whopping 90% during the last six months of 2023. So we wonder what that says about leverage and deal activity in the market today? The dividend dilemma had previously led PE firms to use NAV loan financing to compensate investors for a slower exit environment. In such an arrangement, the financing is secured against the underlying assets across a fund portfolio. The Fund Finance Association expects the market to grow from $100 billion to $600 billion by 2030. Still, if LPs increasingly harbor suspicious minds over NAV loan use for dividends, then the reported drop last year might be seen again.