Company overview
Alder Peak Partners is a mid-market private equity firm. Its third fund (2019 vintage, $1.6bn of investor commitments) is fully invested in 11 companies and valued at $1,720M in the fund's own June 2026 marks. Exits have slowed since 2023: the fund has returned only 0.54x of paid-in capital (DPI), and its investors (LPs) are pressing for cash back before the firm raises Fund V next year.
Alder Peak is asking for a $240M NAV loan to the fund's holding vehicle, secured by a pledge of its interests in the portfolio holding companies and its bank accounts. $110M would fund follow-on investments in two existing companies: $60M into Quarry Labs, a loss-making diagnostics software business, and $50M for an add-on acquisition at Meridian Pet Care. The other $130M would be distributed to LPs straight away.
The loan is repaid from the fund's exit proceeds over five years. The lender has no claim on the investors' uncalled commitments, and every portfolio company has its own senior debt (net leverage of about 5 to 7 times EBITDA) that ranks ahead of the fund's equity.
The IC question: how much is the collateral really worth and how fast can it turn into cash; does the structure protect the lender if marks fall and exits stay slow; and should a lender fund a distribution to investors at all?
Your memo should answer
- 01Would you provide this facility on these terms? State your recommendation, and the conditions or changes you would require.
- 02What are the main risks to the lender? Consider valuation, concentration, liquidity and exit timing, structural subordination, use of proceeds and alignment with the GP.
- 03Calculate LTV at closing and after the follow-on investments, the annual interest cost, and how well exit proceeds cover it. Does the concentration limit bite?
- 04Build a downside: marks fall and exits stall for two years while interest is paid in kind. When do the sweep and the LTV covenant trigger, and what would the lender recover in a forced sale?
- 05Do the LTV covenant, sweeps, concentration limits, PIK option and distribution test protect the lender? What would you change?
Financials ($M)
| 2023 | 2024 | 2025 | LTM Jun-26 | |
|---|---|---|---|---|
| Net asset value, GP marks | 1640 | 1710 | 1745 | 1720 |
| Exit proceeds received | 260 | 120 | 85 | 55 |
| Distributions to LPs | 210 | 95 | 60 | 40 |
| Capital called from LPs | 140 | 65 | 30 | 20 |
| Uncalled commitments, year end | 210 | 145 | 115 | 95 |
| Portfolio EBITDA growth, weighted | 11% | 7% | 4% | 2% |
| DPI (distributions ÷ paid-in capital) | 0.42x | 0.48x | 0.52x | 0.54x |
Term sheet
- Facility
- $240M senior secured term loan to Alder Peak Fund III Holdings LP, fully drawn at closing
- Security
- Pledge of the fund's equity interests in its portfolio holding companies and its bank accounts; no recourse to LPs' uncalled commitments
- Term
- 5 years (2031); no scheduled amortization
- Pricing
- SOFR + 650 bp, 2.0% OID; interest may be paid in kind (PIK) for up to 8 quarters at SOFR + 725 bp
- Use of proceeds
- $110M follow-on investments (Quarry Labs $60M, Meridian Pet Care $50M); $130M distribution to LPs at closing
- Loan-to-value covenant
- Maximum 25% of eligible NAV (event of default)
- Cash sweep
- 50% of exit proceeds when LTV is 15% or more; 100% when LTV is 20% or more
- Concentration limits
- Any single company counts toward eligible NAV only up to 20% of the total; the top three up to 50%
- Valuation
- Quarterly GP marks; the lender may order one independent valuation a year at the fund's cost
- Further distributions
- Allowed only if LTV is below 12.5% after the payment
- Pricing context
- NAV loans to buyout funds at 10% to 20% LTV recently priced at SOFR + 550 to 750 bp, often with a 1–2% OID
Portfolio at June 30, 2026 (GP marks, $M; company net leverage in turns of EBITDA)
- Brightline Software
- 310 (18.0% of NAV) · valued at 16.5x EBITDA · net leverage 6.8x
- Corriden Healthcare Services
- 265 (15.4%) · 12.0x · 6.2x
- Halstead Industrial
- 205 (11.9%) · 9.5x · 4.9x
- Meridian Pet Care
- 180 (10.5%) · 13.0x · 5.8x
- Ostrava Logistics
- 150 (8.7%) · 8.0x · 5.5x
- Pinecrest Education
- 135 (7.8%) · 11.0x · 5.1x
- Quarry Labs
- 120 (7.0%) · 4.5x revenue (not yet profitable) · revolver drawn
- Four other companies
- 355 (20.6%) · 8.5x to 11.0x · 4.0x to 5.5x
- Total
- 1,720 · top three companies 45.3% of NAV
Marks and markets (June 2026)
- GP marks vs public peers
- Fund NAV down 1% since Dec 2024; listed peers of the top five companies down 15% on average over the same period
- Secondary market
- LP stakes in 2019–2020 buyout funds trading at 80% to 90% of NAV; single-asset sales in a forced sale typically 70% to 80% of NAV
- Exit pipeline (GP view)
- Halstead and Ostrava sale processes planned for 2027; Brightline IPO 'considered' for 2028
- Fund cash
- $35M at June 30, 2026
- Rates
- SOFR 4.0%