What is a NAV discount?

Reported NAV can be months old by the time a deal is priced, so the discount partly reflects changes since then. Discounts vary with the type of fund, its age and the market, and buyers may also take on unfunded commitments. Deferred payment terms can make a headline price look better than its present value.

Say a stake has a reported NAV of $100 million and sells for $90 million. That is a 10% discount, or 90 cents on the dollar.

It is the main way secondary deals are priced and quoted, and it shows how buyers view a fund’s reported values and the wait for cash.