NB
Private Equity Partners (NBPE)
25/04/2024
Results analysis from Kepler Trust
Intelligence
NB Private Equity Partners
(NBPE) has released its full year results for 2023, as well as its
monthly NAV update for 31/03/2024. NAV total returns for 2023 stood
at 2.3%. However, returns for the private company portfolio stood
at 5.3% on a constant currency basis driven by strong operating
performance and realisation activity.
NBPE benefitted from
realisations totalling $171m in 2023, or 12% of the portfolio value
at the start of the year and an aggregate 2.1x cost. Investments
for the period totalled $22m, although these were primarily in
support of M&A activity for existing portfolio companies. Since
the start of the year the trust has invested $38m into two new
healthcare investments, compared to $64m in cash proceeds received.
The managers expect to receive a further $42m from realisations in
the months ahead and have committed $28m to a further new, as yet
undisclosed, investment.
NBPE is well-positioned to
take advantage of any opportunities that present themselves. The
trust has $362m of available liquidity as at 31/03/2024, with $151
million in cash and $210 million from its credit
facility.
NBPE chairman William Maltby
said: "The NBPE portfolio is well positioned given the
'all-weather' investment approach the Neuberger Berman team has
followed for many years. The portfolio is focused on two key
themes, long-term secular growth and/or business with low
cyclicality and is invested in well-diversified, industry leading
businesses, with attractive cash flow generation and resilient
business models, made alongside some of the most experienced and
well-resourced private equity managers
globally."
Kepler View
Sales and earnings growth of
11.4% and 15.2% respectively over the course of 2023 illustrate the
strength of NB Private Equity Partners' (NBPE) portfolio companies
today. That EBITDA growth outstripped increases in sales is also a
tangible sign that the synergies the managers bring to portfolio
holdings, whether that's via M&A activity or cost efficiency
improvements, can have a meaningful impact on a company's
returns.
Although the backdrop for
private equity remains challenging, positive earnings growth also
continues to be supportive of valuations. It also suggests the
managers are meeting their aim of investing in businesses that can
deliver secular growth and/or which operate in lower expected
cyclicality.
Realisations in the portfolio
of $171m in 2023 represented 12% of the start of year NAV, a robust
level given the tough market backdrop for exits. Low investment
levels of $22m in 2023 and a further $38m in Q1 of this year with
an additional $28m pending means that NBPE is in a strong position
to invest when opportunities arise, with the managers sitting on
$362m of available liquidity. However, it is also worth noting that
the trust was 102% invested at the end of March, meaning they are
not under pressure to invest over the short
term.
The discount narrowed
substantially over the course of 2023 from 32% to 24% at the end of
the year. The trust's shares continue to trade at a 24.5% discount
to NAV as at 24/04/2024. Although the market backdrop does remain
challenging, NBPE's portfolio companies continue to deliver strong
financial results. The trust's co-investment model also means that
investors have much greater transparency on those holdings relative
to peers. With the trust sitting on large levels of dry powder, we
think the managers are well-positioned to take advantage of
opportunities sourced from the $110bn NB Private Markets platform.
Continued strong performance and smoother market conditions may
also result in a tightening of the discount, providing prospective
investors with a greater uplift to capital.
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