NAV financing, continuation funds, public pension funds and their increased private equity allocations, and the commercial real estate outlook – here’s what we’re reading.

• NAV financing is filling in the gap left by the year-to-date decline in M&A activity and private deal exits, according to the FT’s Buyout groups raise debt against portfolios to return cash as dealmaking slows. Borrowing against portfolio assets allows funds to return capital to investors, which is particularly helpful for sponsors in the process of fundraising. The article highlights some of the most recent NAV financings but overextends itself a bit by venturing into quoting NAV pricing without any reference to asset class, term, structure or leverage.  
• Bloomberg’s Matt Levine turned his attention to continuation funds in Tuesday’s edition of Money Stuff. (Be sure to sign up if you’re not getting the former Goldman Sachs banker and former Wachtell M&A lawyer’s free newsletter.) The write-up recaps why continuation funds are controversial among investors and why the alignment of incentives are not quite as straightforward as is sometimes assumed.
• U.S. public pension funds increased private equity allocations to 13% in 2022, up from 11% the prior year and 8% in 2001, according to research from the Equable Institute. In dollar terms, pension fund investments in private equity total $620 billion. The authors expect 2023 private equity returns to decelerate further following a decline in 2022.
• The commercial real estate outlook received a fair bit of attention this week as banks reported earnings (here and here).