JPMorgan is moving to transfer risk on its $4 billion book of NAV loans to private equity funds. Discussions indicate the bank wants investors to absorb up to 12.5% of potential losses on the pool, offering low-teens returns for taking this first-loss position. Terms remain fluid as the bank structures the deal across facilities spanning North America, Europe, and the Middle East.

NAV loans have grown as sponsors use them to return capital to limited partners or inject growth funding, creating layered leverage on top of existing portfolio company debt. While typically pitched as low-risk due to diversification, prolonged realizations and AI valuation concerns have raised questions about these assumptions. Regulators have flagged "leverage over leverage" risks while market participants question whether such borrowings flatter performance.

JPMorgan isn't alone in repositioning - Mitsubishi UFJ Financial Group is pursuing similar risk transfer structures. With NAV lending at $100 billion projected to reach $350 billion by 2030, banks face a dilemma: continue originating in an expanding market while managing risk from facilities backed by leveraged, illiquid assets. This trend reflects growing caution in a sector that previously expanded rapidly.