NB Private Equity: Interim Results and 31 August 2022 NAV Estimate
THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO AUSTRALIA, CANADA, ITALY, DENMARK, JAPAN, THE UNITED STATES, OR TO ANY NATIONAL OF SUCH JURISDICTIONS.
21 September 2022
NB Private Equity Partners (NBPE), the $1.3bn, FTSE 250, listed private equity investment company managed by Neuberger Berman, today releases its 2022 Interim Report and 31 August 2022 Monthly Portfolio Update
*Interim Results Highlights (30 June 2022)*
· NAV per share of $28.67 (£23.61)
· (8.1%) NAV TR in the six months to 30 June 2022
· Decline in NAV driven by quoted holdings and negative foreign exchange
· Valuations of private companies increased by 2.7% in constant currencies
· Portfolio company weighted average LTM 30 June 2022 operating performance of 27% revenue and 20% EBITDA growth^1, respectively, inclusive of M&A
· Private portfolio LTM/EBITDA valuation multiple of 16.5x at 30 June 2022, a decrease from 17.4x at 31 December 2021; weighted average net debt of 5.7x, an increase from 5.2x at 31 December 2021^2
· $110 million of announced realisations through 30 June 2022
· $371 million of available liquidity
*As of 30 June 2022* *YTD* *1 Year* *3 years* *5 years* *10 years*
NAV TR (USD) (8.1%) 3.1% 64.0% 102.3% 245.2%
MSCI World TR (USD) (20.3%) (13.9%) 24.3% 48.5% 161.8%
Share price TR (GBP) (18.2%) 10.6% 48.2% 71.7% 360.2%
FTSE All-Share TR (GBP) (4.6%) 1.6% 7.4% 17.8% 94.6%
*Reflects cumulative returns over the time periods shown and are not annualised.
*Peter Von Lehe, Managing Director and Head of Private Equity Investment Solutions & Strategy at Neuberger Berman commented:*
“We believe the portfolio is well positioned to navigate the current macro-economic headwinds. While NAV was impacted by a decline in value of our quoted holdings and negative foreign exchange movements in the first half, overall underlying operating performance remains positive, with companies growing revenue and earnings, despite the challenging backdrop.”
*Paul Daggett, Managing Director of Neuberger Berman, continued:*
“We are pleased with the overall operating performance NBPE’s underyling portfolio companies, with the majority producing growth both organically and through M&A. Some of the strongest revenue growth over the last twelve months came from companies in the Industrials and Business Services sectors.
As we look across the portfolio, we believe the characteristics of many of our businesses – essential services, leading market positions, strong recurring revenue streams and / or limited energy input costs positions the portfolio to navigate the current market environment and deliver value over the long-term.”
The Company’s 2022 Interim Report and a video from Neuberger Berman to accompany the results are available to view at: https://www.nbprivateequitypartners.com/.
*Portfolio Update to 31 August 2022*
Movements in public holdings and negative FX movements have resulted in a NAV TR decrease of 10% during 2022 year to date
· 31 August 2022 NAV per share of $27.70 (£23.81), a decrease of 2.5% in the month
· $29 million and $5 million attributable to declines in quoted share prices and negative foreign exchange valuation adjustments, respectively, during the month of August
*Realisations from the portfolio continue in 2022*
· 2022 year to date announced realisations of $114 milllion^3
– Six full or partial sales announced in 2022 include: the remaining assets of Telxius, the announced full sales of Leaseplan and Omega Environmental Technologies, the partial realisation of MHS Global, the sale of Stratus Technologies and the partial sale of an additional transaction which was signed in June and closed in August 2022^4
*Dividend of $22 million paid in August*
· Taking total dividends for 2022 to $44m, or $0.94 per share, a 3.4% yield on NAV and 5.0% yield on the share price
*Significant available liquidity at 31 August 2022*
· $300 million undrawn credit line and $50 million of cash
· In addition, $39 million of distributions expected over the coming months from announced realisations
· Final entitlement of £63.4 million ($76.4 million) of 2022 ZDPs to be repaid at maturity on 30 September 2022
*Portfolio Valuation*
The fair value of NBPE’s portfolio as of 31 August 2022 was based on the following information:
· 15% of the portfolio was valued as of 31 August 2022
· · 12% in public securities
· 3% in private direct investments
· 85% of the portfolio was valued as of 30 June 2022
· · 84% in private direct investments
· 1% in private fund investments
*Capital Markets Day*
NBPE plans to hold a virtual Capital Markets Day.
Date: Thursday 6 October 2022
Start: 14:00 BST
Finish: 16:00 BST
The Company’s Chairman, William Maltby, and the senior portfolio management team from NB Private Markets will provide a detailed analysis of the portfolio and share their latest views on the private equity market. Neuberger Berman’s ESG team will also provide an update on the portfolio. In addition, case studies of underlying portfolio companies will be presented by two of the lead private equity firms which NBPE has invested alongside. This will be followed by Q&A.
Participants may register for the event at the following event page link:
https://www.lsegissuerservices.com/spark/NBPrivateEquityPartnersLtd/events/44eeeafb-c4d8-4c42-a252-feafdc2c7d4e
*Governance Update*
William Maltby resigned as a member of the Audit Committee with effect from 20 September 2022.
*For further information, please contact:*
*NBPE Investor Relations +1 214 647 9593*
*Kaso Legg Communications +44 (0)20 3995 6673*
Charles Gorman nbpe@kl-communications.com
Luke Dampier
Charlotte Francis
*Supplementary Information (as at 31 August 2022)*
*Company Name* *Vintage* *Lead Sponsor* *Sector* *Fair Value* *% of FV*
Constellation Automotive 2019 TDR Capital Business Services 69.1 5.0%
Action 2020 3i Consumer / E-commerce 53.3 3.8%
Advisor Group 2019 Reverence Capital Financial Services 46.0 3.3%
USI 2017 KKR Financial Services 42.0 3.0%
Kroll 2020 Further Global / Stone Point Financial Services 41.1 2.9%
Agiliti (NYSE: AGTI) 2019 THL Healthcare 40.1 2.9%
Material Handling Systems 2017 THL Industrials / Industrial
Technology 39.0 2.8%
Business Services Company* 2017 Not Disclosed Business Services 33.3 2.4%
Cotiviti 2018 Veritas Capital Healthcare 33.0 2.4%
AutoStore (OB.AUTO) 2019 THL Industrials / Industrial Technology 32.8 2.4%
Excelitas 2017 AEA Investors Technology / IT 32.7 2.3%
GFL (NYSE: GFL) 2018 BC Partners Business Services 31.9 2.3%
BeyondTrust 2018 Francisco Partners Technology / IT 30.1 2.2%
Marquee Brands 2014 Neuberger Berman Consumer / E-commerce 30.1 2.2%
Branded Toy Company* 2017 Not Disclosed Consumer / E-commerce 26.5 1.9%
Stubhub 2020 Neuberger Berman Consumer / E-commerce 26.4 1.9%
Auctane 2021 Thoma Bravo Technology / IT 26.1 1.9%
Engineering 2016 NB Renaissance / Bain Capital Technology / IT 23.3 1.7%
True Potential 2022 Cinven Financial Services 23.1 1.7%
Branded Cities Network 2017 Shamrock Capital Communications / Media 22.3 1.6%
Staples 2017 Sycamore Partners Business Services 22.1 1.6%
Addison Group 2021 Trilantic Capital Partners Business Services 21.7 1.6%
Monroe Engineering 2021 AEA Investors Industrials 21.3 1.5%
Chemical Guys 2021 AEA Investors Consumer / E-commerce 21.1 1.5%
Accedian 2017 Bridge Growth Partners Technology / IT 20.6 1.5%
Bylight 2017 Sagewind Partners Technology / IT 20.5 1.5%
Petsmart / Chewy (NYSE: CHWY) 2015 BC Partners Consumer / E-commerce 20.2 1.5%
Solenis 2021 Platinum Equity Industrials 20.1 1.4%
Renaissance Learning 2018 Francisco Partners Technology / IT 16.8 1.2%
Peraton 2021 Veritas Capital Technology / IT 16.3 1.2%
*Total Top 30 Investments* * * * $903.0 * *64.8%*
*Undisclosed company due to confidentiality provisions.
*Geography* *% of Portfolio*
North America 74%
Europe 22%
Asia / Rest of World 4%
*Total Portfolio* *100%*
*Industry* *% of Portfolio*
Tech, Media & Telecom 19%
Consumer / E-commerce 22%
Industrials / Industrial Technology 14%
Business Services 14%
Financial Services 14%
Healthcare 10%
Other 7%
Energy 1%
*Total Portfolio* *100%*
*Vintage Year* *% of Portfolio*
2014 & Earlier 4%
2015 3%
2016 7%
2017 24%
2018 20%
2019 18%
2020 11%
2021 11%
2022 2%
*Total Portfolio* *100%*
*About NB Private Equity Partners Limited*
NBPE invests in direct private equity investments alongside market leading private equity firms globally. NB Alternatives Advisers LLC (the “Investment Manager”), an indirect wholly owned subsidiary of Neuberger Berman Group LLC, is responsible for sourcing, execution and management of NBPE. The vast majority of direct investments are made with no management fee / no carried interest payable to third-party GPs, offering greater fee efficiency than other listed private equity companies. NBPE seeks capital appreciation through growth in net asset value over time while paying a bi-annual dividend.
LEI number: 213800UJH93NH8IOFQ77
*About Neuberger Berman*
Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies—including equity, fixed income, quantitative and multi-asset class, private equity, real estate and hedge funds—on behalf of institutions, advisors and individual investors globally. With offices in 25 countries, Neuberger Berman’s diverse team has over 2,500 professionals. For eight consecutive years, the company has been named first or second in Pensions & Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more). In 2020, the PRI named Neuberger Berman a Leader, a designation awarded to fewer than 1% of investment firms for excellence in Environmental, Social and Governance (ESG) practices. The PRI also awarded Neuberger Berman an A+ in every eligible category for our approach to ESG integration across asset classes. The firm manages $418 billion in client assets as of June 30, 2022. For more information, please visit our website at www.nb.com.
This press release appears as a matter of record only and does not constitute an offer to sell or a solicitation of an offer to purchase any security. NBPE is established as a closed-end investment company domiciled in Guernsey. NBPE has received the necessary consent of the Guernsey Financial Services Commission. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results. This document is not intended to constitute legal, tax or accounting advice or investment recommendations. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of NBPE's investment manager. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Additionally, this document contains "forward-looking statements." Actual events or results or the actual performance of NBPE may differ materially from those reflected or contemplated in such targets or forward-looking statements.
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^1Past performance is no guarantee of future results. Fair value as of 30 June 2022, subject to the following adjustments. 1) Excludes public companies. 2) Analysis based on 67 private companies. 3) The private companies included in the data represent approximately 80% of the total direct equity portfolio. 4) Data excludes one new 2022 investment and one pending realisation. 5) Three additional companies, totaling $28 million, were excluded from the data due to anomalous percentage changes the Manager considers to be outliers. Portfolio company operating metrics are based on the most recently available (unaudited) financial information for each company and based on as reported by the lead private equity sponsor. Where necessary, estimates were used, which include pro forma adjusted EBITDA and other EBITDA adjustments, pro forma revenue adjustments, run-rate adjustments for acquisitions, and annualised quarterly operating metrics. LTM periods as of 30/6/22 and 31/3/22 and 30/6/21 and 31/3/21. LTM revenue and LTM EBITDA growth rates are weighted by fair value. If one large investment is excluded which completed a significant M&A transaction during the current year, the weighted average LTM revenue and LTM EBITDA growth at 30 June 2022 would be 18.4% and 16.2%, respectively.
^2Past performance is no guarantee of future results. Fair value as of 30 June 2022, subject to the following adjustments. 1) Excludes public companies. 2) Based on 55 private companies which are valued based on EV/EBITDA metrics. 3) The private companies included in the data represents 71% of direct equity investment fair value. 4) EV/EBITDA metrics excludes pending 2022 realisations. 5) Companies not valued on multiples of trailing EBITDA are excluded from valuation and leverage statistics. 6) Leverage statistics exclude companies with net cash position and leverage data represents 70% of direct equity investment fair value. Portfolio company operating metrics are based on the most recently available (unaudited) financial information for each company and are as reported by the lead private equity sponsor. If one large investment is excluded which completed a significant M&A transaction during the current year, EV/EBITDA and net debt to EBITDA would be 16.3x and 5.8x, respectively.
^3$77 million of cash from realisations received through 31 August 2022, of which $17 million was attributable to a sale announced in 2021, but received in 2022. Including the partial realisation signed in June 2022, NBPE expects total additional net cash from these realisations of $39 million.
^4Additional transaction represents an aggregate gross value to NBPE of approximately $33 million, of which NBPE expects to receive approximately $12 million in cash and NBPE has elected to roll a total of approximately $21 million in value. The transaction closed in August 2022 and NBPE expects to receive the cash in the coming weeks.
*Attachments*
· NBPE Q2 Interim Report vF
· NBPE August 2022 Factsheet vF
· NBPE Investor Presentation - September 2022 vF