NB Private Equity Partners Update
Investing in private companies to generate long-term growth
Results as of 31 December 2023, unless otherwise noted
THIS PRESENTATION MAY CONTAIN FORWARD LOOKING STATEMENTS
THIS PRESENTATION HAS BEEN CREATED WITH THE BEST AVAILABLE INFORMATION AT THIS TIME. INFORMATION FLOW IN THE PRIVATE EQUITY ASSET CLASS OFTEN LAGS FOR SEVERAL MONTHS. THE PRESENTATION MAY CONTAIN FORWARD LOOKING STATEMENTS, PROJECTIONS AND PRO FORMA INFORMATION BASED UPON THAT AVAILABLE INFORMATION. THERE CAN BE NO ASSURANCE THAT THOSE STATEMENTS, PROJECTIONS AND PRO FORMA NUMBERS WILL BE CORRECT; ALL OF THEM ARE SUBJECT TO CHANGE AS THE UNDERLYING INFORMATION DEVELOPS.
THE INFORMATION IN THIS PRESENTATION IS BASED ON THE 31 DECEMBER 2023 MONTHLY NAV ESTIMATE, UNLESS OTHERWISE NOTED.
2
NBPE - Investing in Private Companies to Generate Long-term Growth
Direct investments in private equity owned companies
Investing globally, with a focus on the US, the largest and deepest PE market
Investing alongside top- tier PE managers in their core areas of expertise
Leveraging the strength of Neuberger Berman's platform, relationships, deal flow and expertise to access the most attractive investment opportunities available
A highly selective and responsible investment approach
Focusing on sectors and companies expected to benefit from long term structural growth trends, such as changing consumer patterns, demographic shifts or less cyclical industries
16.1%
Gross IRR on direct equity investments (5 years)
39.1%
Underpinned by a strong focus on responsible investment, with ESG considerations
fully integrated into the investment process
Average uplift on IPOs/realisations (5 years)
Benefits of NBPE's co- investment model
Diversified across sectors, underlying private equity managers and company size Focused on the best opportunities - control the investment decision
Dynamic - can respond to market conditions
ESG Due Diligence - both manager and company-level assessment Fee efficient - single layer of fees
2.3x
Multiple of cost on realisations (5 years)
Note: See endnote 1 for information on uplift and multiple calculation; data as of 31 December 2023.
3
Leading Discretionary Private Markets Investor1
Over 35 years as a private markets investor with an attractive position in the private markets ecosystem as a capital solutions partner
Co-investments | DEEP RELATIONSHIPS WITH LEADING | |||
$35bn3 | ||||
PRIVATE EQUITY MANAGERS | ||||
740+ private equity fund investments5 | ||||
Managing | Secondaries | 460+ direct equity & credit investments6 | ||
Primaries | ~$120bn+ | |||
$40bn3 | in Private Markets2 | $19bn3 | ~7,800 underlying portfolio companies4 | |
Direct Private Credit | 380+ private equity fund advisory board seats7 | |||
Direct Specialty | $20bn | $28bn+ capital committed over the last 3 years8 | ||
Strategies | ||||
Note: As of September 30, 2023, unless otherwise noted. $5bn | ||||
- Approximately 96% of commitments under management are discretionary assets.
- As of September 30, 2023. Represents aggregate committed capital since inception in 1987, including commitments in the process of documentation or finalization.
- Includes estimated allocations of dry powder for diversified portfolios consisting of primaries, secondaries, and co-investments. Therefore, amounts may vary depending on how mandates are invested over time.
- Represents active portfolio companies for Private Investment Portfolios and Co-investments ("PIPCO") and Secondaries since inception as of June 30, 2023.
- Primary and secondary fund commitments as of June 30, 2023. Includes active investments, which are defined as investments with net asset value greater than $0 (i.e. not fully realized), and funds that have not yet called capital as of the latest available quarter of performance.
- As of June 30, 2023.
- Includes Limited Partner Advisory Committee seats and observer seats for PIPCO and Secondaries since inception as of June 30, 2023.
- Represents opportunities committed to across primaries, co-investments and secondaries by NB Alternatives from 4Q 2020 - 3Q 2023 for PIPCO and Secondaries.
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Robust Private Markets Team
Global presence with over 375 private markets professionals
INVESTMENT
TEAMS
110+ | Primaries & Co-Investments | |
Secondaries | ||
60+ | Private Credit | |
Specialty Strategies |
375+
Global Private Markets
Professionals
NON-INVESTMENT TEAMS
15+ | ESG, ODD & Risk | |
Professionals1 | ||
20+ | Legal & Compliance | |
Professionals | ||
60+ | Finance & Operations | |
Professionals | ||
60+ | Client Solutions / IR | |
Professionals |
EXPERIENCE | FOOTPRINT | GLOBAL | DIVERSITY | STABILITY |
22+ | 12 | 35+ | 33% | 98% |
Average Years Experience | Private Markets Investment | Languages Spoken | Of the Private Markets | Retention Level of Senior |
Of Senior Investment Team2 | team are Women3 | Investment Team4 | ||
Offices Globally | ||||
Note: As of January 31, 2024, unless mentioned otherwise.
- Shared firm resources. Subject to Neuberger Berman's policies and procedures, including certain information barriers within Neuberger Berman that are designed to prevent the misuse by Neuberger and its personnel of material information regarding issuers of securities that has not been publicly disseminated.
- Represents Senior Investment Professionals (Senior Advisors, Managing Directors and Principals) within NB Private Markets, as of January 31, 2024.
- Represents the share of women within the NB Private Markets team, as of January 31, 2024.
- Average annual retention from 2019 through December 31, 2023 of Senior Investment Professionals (Managing Directors and Principals) within NB Private Markets. Computed as number of departures over total number of senior investment professional senior team only.
5
NBPE Performance Highlights
Strong long term NAV total return and share price performance
Private Valuations & NAV
- On a constant currency basis private valuations increased by 5.2% YTD through 31 December 2023
- $28.08 / £22.03 per share at 31 Dec 2023
Realisations as of 31 Dec 2023
- $171 million of total cash proceeds received
- Further $39 million expected from the full sales of FV Hospital and Melissa & Doug as well as Petsmart's partial sale, all of which are announced but not yet closed
- 12% uplift / 2.2x multiple on 2023 exits
NAV Total Return (USD)1 as of 31 December 2023
-
Total Return
250%
Ten Year | |||||||||||||||||||||||||||||
207% | |||||||||||||||||||||||||||||
200% | Cumulative | ||||||||||||||||||||||||||||
NAV TR | |||||||||||||||||||||||||||||
207.1% | |||||||||||||||||||||||||||||
150% | 141% | ||||||||||||||||||||||||||||
100% | |||||||||||||||||||||||||||||
87% | |||||||||||||||||||||||||||||
84% | |||||||||||||||||||||||||||||
50% | |||||||||||||||||||||||||||||
37% | |||||||||||||||||||||||||||||
24% | 25% | ||||||||||||||||||||||||||||
0% | 2% | ||||||||||||||||||||||||||||
2023 | Three Year | Five Year | Ten Year | ||||||||||||||||||||||||||
NBPE Annualised | 11.1% | 12.9% | 11.9% |
USD Return MSCI World Index 2
Share Price Total Return (GBP)1 as of 31 December 2023
% Total Return
400% | ||||||||||||||||||||||||||||||||||||
Ten Year | ||||||||||||||||||||||||||||||||||||
350% | 347% | |||||||||||||||||||||||||||||||||||
Cumulative | ||||||||||||||||||||||||||||||||||||
300% | Share Price TR | |||||||||||||||||||||||||||||||||||
250% | 347.2% | |||||||||||||||||||||||||||||||||||
200% | ||||||||||||||||||||||||||||||||||||
150% | ||||||||||||||||||||||||||||||||||||
100% | 107% | |||||||||||||||||||||||||||||||||||
63% | 68% | |||||||||||||||||||||||||||||||||||
50% | 38% | |||||||||||||||||||||||||||||||||||
28% | ||||||||||||||||||||||||||||||||||||
8% | ||||||||||||||||||||||||||||||||||||
9% | ||||||||||||||||||||||||||||||||||||
0% | ||||||||||||||||||||||||||||||||||||
2023 | Three Year | Five Year | Ten Year | |||||||||||||||||||||||||||||||||
17.7% | 15.6% | 16.2% | ||||||||||||||||||||||||||||||||||
NBPE Annualised | ||||||||||||||||||||||||||||||||||||
GBP Return | FTSE All Share Index 2 | |||||||||||||||||||||||||||||||||||
Note: Based on NBPE NAV data as of 31 December 2023. Past performance is no guarantee of future results. Realisations through 31 December 2023.
- Performance figures assume re-investment of dividends at NAV or closing share price on the ex-dividend date and reflect cumulative returns over the relevant time periods shown and are not annualised returns. Three-year,five-year and ten-year annualised returns are presented below the bars for USD NAV and GBP Share Price Total Returns.
- See endnote two and seven for important information regarding benchmarking.
6
Market Environment
Key Concerns Investors are Facing Today
Current market conditions are characterised by persistent inflation, elevated interest rates and
continued high valuation multiples
Are private equity managers underwriting new investments to lower rates of return?
What is the impact of higher interest rates on private equity?
How will private equity be able to generate returns going forward?
How is NBPE positioned in this new environment?
For illustrative and discussion purpose only. The statements above reflect NBAA's views and opinions as of the date hereof and not as of any future date. There can be no assurance that future deal sourcing opportunities will be available or desirable.
8
Underwritten Returns Expectations Remain Consistent
Despite the increase observed in valuation multiples in recent years, expected returns for new investments have remained consistent
Average Sponsor Base Case IRR and Average EBITDA | ||
Multiple for Completed Co-Investments | ||
Gross IRR | ||
Net IRR | ||
EBITDA Multiple Paid at Entry | ||
15.1x | 15.0x | |
11.3x | ||
23% | 24% | 24% |
20% | 20% | 21% |
2018 | 2022 | YTD August 2023 |
- High interest rates and continued high valuation multiples has not resulted in lower expected rates of return
- Private equity managers are continuing to underwrite new investments to ~24% gross IRR
Source: Sponsor materials.
Note: NBAA analysis as of August 2023. Based on average sponsor base case projected gross IRRs and average EBITDA multiple paid at entry for co-investments completed across the NB PIPCO platform from January 2018 through August 2023 according to NB Investment Committee approval date. Averages are simple averages. Projections are inherently uncertain and subject to change. Projections are based on the subjective assumptions and methodology of the sponsor and NBAA has not independently assessed such projections. Actual results may vary materially and adversely. Includes pending investments. There can be no assurance that any pending investment will close or that any of the terms of such transactions described herein or under discussion will be achieved. Analysis excludes infrastructure / real assets and venture / growth investments. PLEASE SEE PERFORMANCE ENDNOTES FOR IMPORTANT DISCLOSURES REGARDING THE CALCULATION OF THE NET ASSET LEVEL PERFORMANCE. Please see Summary Risk Factors for important information concerning, among other things, COVID-19 and its potential impact on valuations and other financial analyses.
9
Sources of Value Creation Have Evolved
Managers are focused on growth, both organic and through M&A
THEN
Historical Projected Value Creation in
NB Co-Investments1
38% | ||||
0% | ||||
(0%) | 100% | |||
63% | ||||
Revenue / | M&A | Multiple | Other (Debt | Total |
EBITDA | Expansion / | Paydown, | ||
Growth | (Compression) | Fees) |
NOW
Projected Value Creation in
10 Recent NB Co-Investments2
17% | (14%) | 4% | ||
93% | 100% | |||
Revenue / | M&A | Multiple | Other (Debt | Total |
EBITDA | Expansion / | Paydown, | ||
Growth | (Compression) | Fees) |
- Value creation today is focused on organic growth, operational improvements, and M&A activity, rather than through debt paydown and multiple expansion
- Multiple compression is expected
Note: As of June 2023.
- Represents 10 NB co-investments from December 2005 - December 2006.
- Represents average of last 10 Private Investment Portfolios and Co-Investments platform co-investments.
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Disclaimer
NB Private Equity Partners Limited published this content on 29 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 07:52:06 UTC.