Sign up for The Memo Europe newsletter for the most crucial updates in the world of leveraged finance, delivered to your inbox every two weeks.

A stagnant M&A market, valuation mismatch, and longer holding periods for private equity GPs — the perfect recipe for a direct lending drought.

But one man's misfortune is another man's gain, as these are the exact factors creating an appetising environment for NAV lenders.

“The state of the M&A market is a tailwind for NAV, just as Trump’s tariffs and Liberation Day is a tailwind,” Peter Hutton, head of NAV financing at Arcmont said. “Increased market uncertainty means that sponsors are choosing to delay exiting their assets, which creates more opportunities for NAV lending.”