London Private Equity and Private Investment Fund partners Ravi Chopra, Ed Saunders and Robert Emerson discussed on Global Legal Insights the key themes around preferred equity to help situate it in the fund financing toolkit, whether in conjunction with or as an alternative to NAV financing. In the context of private investment funds, with greater sophistication and ingenuity of sponsors in optimizing their business opportunities over recent years, there has been an increased diversification of the equity stack at both portfolio and platform levels. Fewer exits across 2022–2024 have generated a need to find alternative sources of capital for investment or to provide liquidity. With valuation uncertainty, and interest rate and FX volatility, managers have expanded their focus on intermediate capital, with an increased willingness to consider both debt and equity solutions. Some products seen in the market look to cherry pick the most attractive features of the two, including “off to the side” NAV financing secured not over a whole portfolio, but rather over a preferred interest at the level of a portfolio aggregator, as an established liquidity solution. Sponsors also continue to seek alternative ways to finance platform-level strategic opportunities and initiatives.