How HoldCo Investors Can Borrow Against Shares to Unlock Liquidity

A Strategic Financing Option for Investors and Operators with Diversified, Illiquid Assets

Introduction: The Growth of HoldCo Investing

Holding companies, or “HoldCos,” have grown increasingly popular among entrepreneurs, family offices, private equity professionals, and other long-term investors. Often citing inspiration from the success of Berkshire Hathaway, these “mini-Berkshires” enable operators and investors to acquire, hold, and compound value through the reinvestment of free cash flow into diversified, private businesses over an extended horizon.

Despite clear strategic advantages—such as stable cash flow, diversification, and long-term value creation—HoldCos face a common challenge: illiquidity.

Unlike publicly traded equities, privately held shares, including those of private HoldCos, can’t easily or quickly be converted into liquidity. As a result, shareholders are constrained when cash needs arise for strategic investments or other growth initiatives.

Understanding the Liquidity Challenge for HoldCo Shareholders

When HoldCo shareholders are presented with investment opportunities or other strategic financial needs, their options tend to be limited to finding a buyer for their shares. HoldCo operators themselves are also generally limited to selling their shares or raising dilutive equity at the HoldCo level. Often, private HoldCo shares can be difficult to sell, or shareholders may prefer to not sell shares in order to fulfill a shorter-term liquidity need.

Common challenges include:

• Funding strategic acquisitions without external equity dilution

• Providing liquidity for shareholder redemptions without forcing portfolio asset sales

• Investing in new ventures or projects without disrupting long-term holdings

• Bridging financial gaps prior to planned liquidity events (such as a recapitalization or partial portfolio sale)

• Making diversifying investments to manage portfolio risk effectively

• Meeting personal liquidity needs, such as estate planning or tax obligations

Traditional financial institutions are generally reluctant to lend against illiquid private shares, making these situations particularly challenging.

PCA’s Solution: Borrowing Against HoldCo Shares Using NAV

At Pacific Coast Alternatives (PCA), we specialize in lending secured by illiquid, privately held assets. Our financing solutions help shareholders unlock liquidity from the Net Asset Value (NAV) of private ownership interests. While PCA’s lending capabilities extend broadly to illiquid assets—such as private equity, limited partnership interests, real estate holdings, and more—HoldCo structures represent a particularly good fit for our lending model.

By lending personally to HoldCo shareholders and using the portfolio’s NAV as collateral, PCA provides strategic capital without dilution or selling assets.

Our solution delivers several advantages:

• Non-dilutive financing: Maintain existing ownership and control

• Tailored flexibility: Customized loan structures aligned to your strategic goals

• Liquidity without disruption: Avoid prematurely liquidating valuable assets or altering portfolio strategy

Strategic Uses of NAV-Based HoldCo Financing

Our NAV-based financing solution is highly flexible, addressing multiple strategic scenarios, including:

1. Growth Capital and Strategic Acquisitions:  Fund bolt-on acquisitions or new strategic investments without external equity dilution or asset sales.

2. Investor Redemptions and Shareholder Buyouts:  Provide liquidity to exiting or legacy shareholders without forcing the sale of underlying portfolio businesses.

3. New Ventures and Projects:  Launch or fund new initiatives, joint ventures, or internal startup projects, leveraging existing portfolio value.

4. Diversification of Investments:  Use liquidity unlocked from your HoldCo shares to make diversifying investments and manage risk.

5. Bridge to Future Liquidity Events:  Address timing mismatches between immediate cash flow needs and anticipated future liquidity events, such as refinancing or recapitalization.

6. Personal Financial Planning:  Address personal liquidity needs, such as estate planning or tax obligations, without disrupting portfolio strategy.

Ideal Candidates for PCA’s Financing Solution

While PCA lends against a wide range of illiquid assets, HoldCos typically align exceptionally well with our underwriting model. Strong candidates generally feature:

• A diversified portfolio of multiple private businesses or cash-flowing assets

• Reliable NAV calculations or relatively easily verifiable valuations

• Complete information packages and transparent reporting

• A long-term, growth-oriented strategy that benefits from non-dilutive liquidity

PCA’s Tailored Approach

Our process is streamlined for sophisticated investors, entrepreneurs, and private asset holders:

• Collaborative underwriting: Partnership approach; we seek to deeply understand borrowers' businesses and support their investment strategies

• Customized loan structures: Bespoke loan facilities that are tailored to the strategic objectives, timelines, and needs of the borrower

• Preservation of control and ownership: Providing liquidity without operational interference or equity dilution

• Confidentiality and discretion: Ensuring borrower privacy and a seamless financing process

Conclusion: Unlocking Liquidity for HoldCo Shareholders

HoldCos represent a powerful structure for compounding wealth and building diversified portfolios, but illiquidity can limit their strategic flexibility. PCA’s NAV-based financing provides an innovative and practical solution, allowing HoldCo shareholders to access liquidity without sacrificing control, ownership, or long-term strategy.

If you're a HoldCo shareholder, operator, or advisor—or if you own other illiquid assets and seek liquidity—we’d be happy to discuss how PCA’s tailored financing solutions might fit your needs.

Contact PCA today to explore borrowing against HoldCo shares or other private ownership interests to unlock capital for strategic investments.