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E249: How LPs Unlock Liquidity Without Selling
Episode 249
How do LPs unlock liquidity from private-fund positions without selling at a discount? In this episode, I talk with Alex Simpson, Co-founder of Liquid LP, a platform that provides NAV loans backed by LP and GP interests in private funds. Alex explains how NAV loans work, how lenders underwrite illiquid portfolios, and when borrowing may be preferable to selling in the secondary market. We also discuss how different types of investors—high-net-worth individuals, family offices, and institutions—use these loans for personal liquidity, capital calls, tax needs, portfolio rebalancing, or simply as a liquidity backstop. We also cover underwriting, LTV ranges, recourse structures, timing, advisory boards, and the origin story behind Liquid LP.
Highlights:
- What a NAV loan is and how LP interests serve as collateral.
- Why some LPs choose a NAV loan rather than selling at a discount.
- How high-net-worth investors use NAV loans for personal liquidity and taxes.
- How institutions use NAV loans for portfolio management and capital calls.
- Differences between Liquid LP and large banks like J.P. Morgan or Goldman Sachs.
- Underwriting approach: fund quality, diversification, existing pledges, and use of proceeds.
- Typical LTV ranges (approx. 20–40%) depending on underlying collateral.
- Loan pricing drivers: asset quality, diversification, and loan structure.
- Loan timelines: from fast two-week processes to more complex multi-week cases.
- Recourse vs. non-recourse structures and when each applies.
- Why purpose of the loan matters for underwriting, even if terms are asset-driven.
- Standby NAV lending partnerships with funds to support LP liquidity.
- How GPs sometimes use loans to bridge GP commitments when DPI is slow.
- How Alex built Liquid LP, beginning with pre-IPO lending before shifting to LP liquidity solutions.
- Key risks in NAV lending: undisclosed pledges, documentation issues, and thin data on smaller funds.
- Lessons learned from building an advisory board and aligning incentives.
Guest Bio:
Alex Simpson is the Co-founder of Liquid LP, a fintech platform that provides NAV-backed lending solutions for LPs, GPs, family offices, and wealth-management clients. Before founding Liquid LP, Alex built and operated companies in South Africa and Australia and worked closely with executives at late-stage and pre-IPO technology companies. His experience in private markets, lending, and alternative-asset liquidity led him to develop a platform focused on helping investors access liquidity without selling long-term positions.
Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.
Stay Connected:
X / Twitter: David Weisburd: @dweisburd
LinkedIn: David Weisburd: https://www.linkedin.com/in/dweisburd/ Alexander Simpson: https://www.linkedin.com/in/alsimpson1/
Links LiquidLP: https://www.linkedin.com/company/liquidlps/
Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.
(0:00) Introduction (1:07) Scale of operations, target clientele, and market rates (2:29) Use cases for institutions and competition with large banks (4:04) Due diligence and factors influencing loan terms (8:15) Recourse vs nonrecourse loans and loan's purpose (10:37) NAV loans for investment stability and GP commit solutions (12:46) Flexibility and risk assessment in lending (15:07) Loan durations, processing times, and standby partnerships (18:22) GP stakes field aPublished on 3 weeks, 1 day ago