The 2009 LSE listing marked the beginning of a pivotal phase in NBPE’s growth. Listed private equity funds bridge the gap between private and public equity and are typically split between specialist single manager direct investors and highly diversified fund of funds.
Originally, NBPE launched as a fund of funds, with the portfolio made up of 76% limited partner (LP) investments in externally managed funds and 24% direct private equity investments. The strategy has since been steadily refocused exclusively on direct private equity co-investments, ending new third-party fund investments in 2011 and debt investments in 2018. Today 97% of the portfolio is in direct equity co-investments.
Co-investing directly alongside leading private equity managers provides direct exposure to private companies and allows NBPE to build a portfolio leveraging the strength of Neuberger Berman’s private markets platform. Though resource-intensive compared to the fund of funds approach, this approach enables the NB investment management team to be more actively involved in the due diligence and investment selection process, allowing them to build a diversified, high-quality portfolio of direct private equity co-investments. In addition, it means that NBPE can be a direct investor, without committing to funds, which means it has extremely low unfunded commitments today. For investors, NBPE bridges the gap between public and private markets due to the listed investment company structure but also allowing direct access to leading private equity managers, on a no additional fee or carry basis. Co-investment also offers benefits such as enhanced capital efficiency and greater transparency – fostering a clearer understanding of portfolio construction and underlying company details.
Over the last 15 years, NBPE has generated a GBP Share Price return (from 30 June 2009 to 24 June 2024) of 555.7%, annualised at 13.4%, and a USD NAV return (from 30 June 2009 to 31 May 2024) of 377.3%, which is an annualised return of 11%. Since 2009, NBPE’s top 15 equity investments have returned a combined 3x, with $278m invested and $563m of value appreciation (includes unrealised value as at 31 May 2024).
As at 31 May 2024, NBPE’s portfolio of co-investments comprised 85 private companies invested alongside 53 private equity managers, valued at $1,237m, or 97% of fair value of the portfolio.
NBPE is managed by NB Alternatives Advisers (NBAA), the private equity arm of Neuberger Berman, which has more than 35 years of experience and $115bn in assets under management across the Private Markets platform as of 31 March 2024. NBAA oversees $68bn across primary and co-investment strategies, leveraging the insights and relationships built from more than 410 private equity fund advisory board seats. Over the past three years alone, in total NBAA has directed more than $30bn into private markets investments, which demonstrates Neuberger Berman’s market position, deal flow and the strength of its global relationships with private equity managers.
Paul Daggett, managing director at Neuberger Berman, says: “NBPE’s goal is to invest in high-quality private companies to generate long-term growth. The portfolio’s evolution from funds to direct private equity co-investments today, allows NBPE to invest alongside a wide selection of top-tier private equity managers whilst being able to be highly selective and control the pace of investment activity. The portfolio is built from the bottom up, investment by investment, investing in high-quality companies with some combination of resilient business models, high barriers to entry, and recurring revenue streams, providing shareholders with a portfolio of direct investments diversified by manager, sector, geography and size. As NBPE looks to the future, we continue to focus on backing business models we believe will deliver sustainable earnings growth from long-term secular growth trends and/or from lower expected cyclicality due to their sectors or end markets.”
IMPORTANT INFORMATION
Past performance is not a reliable indicator of future returns. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser and prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Overseas investments are subject to currency fluctuations. The shares of NBPE are listed on the London Stock Exchange and their price is affected by supply and demand and the discount at which NBPE trades could vary significantly based on these factors. NBPE can gain additional exposure to the market, known as gearing, potentially increasing volatility. Investors should note that the views expressed may no longer be current and may have already been acted upon. 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 may contain "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.