Blueprint Intelligence / Data Room and DDQ / Credit facilities, the subscription line and NAV facility disclosures a DDQ actually wants
Data Room and DDQ
Credit facilities, the subscription line and NAV facility disclosures a DDQ actually wants
A fund that uses a credit facility without a written policy governing it is not being asked to explain why it uses one. It is being asked why no policy exists, and that absence is the actual red flag, not the facility itself.
A subscription line of credit or a NAV-based facility is not, by itself, a governance concern. The absence of a written policy governing one, when the fund actually uses it, is. This section of the DDQ wants the facility's terms and the policy governing it stated plainly, since both distort the fund's own reported IRR and DPI timing in ways an allocator needs to be able to adjust for.
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Why this section exists at all
Subscription lines of credit let a fund delay capital calls, which mechanically inflates near-term IRR by shortening the time capital is deployed before a return is realized. A NAV-based facility, borrowing against the fund's existing portfolio value, has its own distortion effects and its own risks, since it can create leverage an LP did not underwrite. Neither is disqualifying on its own. What an allocator is checking for is whether the fund discloses the mechanism plainly enough that its performance figures can be read correctly, adjusted for the facility's effect rather than taken at face value.
What a subscription line policy needs to state
- The maximum line size, stated as a dollar figure or a percentage of committed capital.
- The maximum borrowing duration, meaning how long a draw can stay outstanding before it must be repaid from a capital call.
- How capital calls are reported relative to line usage, so an LP can see when a call is repaying a draw versus funding a new investment.
What a NAV facility policy needs to state, where one exists
A NAV-based facility carries its own separate disclosure requirements: the stated purpose of the borrowing, the lien structure against the portfolio, and the LP notification rights the fund has committed to if the facility is drawn on. A fund using a NAV facility with no written policy on file is a specific, checkable gap, not a general impression of disorganization, and it is exactly the kind of gap an automated DDQ review is built to catch.
Subscription lines and NAV facilities both distort a fund's reported IRR and DPI timing. A written policy stating the facility's size, duration, and reporting treatment is what lets an allocator adjust for that distortion instead of discounting the whole track record on suspicion.
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