Neuberger Private Equity Partners Limited USD · LSE:NBPE
Neuberger Private Equity Partners Limited USD — NB Private Equity Partners — Investor Presentation (November 2016)
44 slides from Neuberger Private Equity Partners Limited USD's investor presentation, November 2016
Slide 1: Investor Presentation
NB PRIVATE EQUITY PARTNERS INVESTOR PRESENTATION Navigating Markets. Discovering Opportunities. NOVEMBER 2016 FINANCIAL INFORMATION AS OF 30 SEPTEMBER 2016 UNLESS OTHERWISE NOTED
Slide 2: NB Private Equity Partners (NBPE)
NB PRIVATE EQUITY PARTNERS (“NBPE”) To provide investors the opportunity for capital appreciation OBJECTIVE (through share price growth) and current income (through a regular dividend)… …by investing directly into private equity-backed STRATEGY companies, across the capital structure in the best rel
Slide 3: NBPE Manager: Neuberger Berman
NBPE MANAGER: NEUBERGER BERMAN We invest directly into companies alongside private equity funds in their core areas of expertise PRIVATE EQUITY PLATFORM Over $40 billion of commitments managed(1) FUND INVESTMENTS DIRECT INVESTMENTS Other Yielding Primary Secondary Co-Investments Private Debt Strateg
Slide 4: Key Investment Attributes
KEY INVESTMENT ATTRIBUTES NBPE has a number of compelling attributes • Diversified portfolio of direct private equity and debt investments with a single 1 layer of fees • Reasonable portfolio valuations and good underlying growth 2 • Strong historic investment performance and portfolio liquidity 3 •
Slide 5: NBPE Portfolio Overview
NBPE PORTFOLIO OVERVIEW Closed end investment company offering diversified private markets exposure PORTFOLIO EQUITY (% of Fair Value) INVESTMENTS • Equity: • Income: Investments in small, mid and Provides yield and large-cap private companies INCOME attractive risk return in alongside high qual
Slide 6: NBPE Balance Sheet Summary
NBPE BALANCE SHEET SUMMARY NBPE SUMMARY BALANCE SHEET 83% of NAV invested 30 September 2016 31 December 2015 in direct investments ($ in millions, except per share values) (Unaudited) (Audited) Direct Investments and NAV per Share of Income Investments $209.1 $283.0 Equity Investments 385.8 350.5 $1
Slide 7: Diversification by Fair Value
DIVERSIFICATION BY FAIR VALUE Well diversified portfolio weighted to North American investments ASSET CLASS GEOGRAPHY North America Income 87% Investments 28% Equity Co- investments 51% Europe 8% Funds Asia / ROW 21% 5% Technology 2015 INDUSTRY VINTAGE YEAR 2016 22% 24% Transp. 9% Industrials 2% 13%
Slide 8: Portfolio Investment Activity & Liquidity
PORTFOLIO INVESTMENT ACTIVITY & LIQUIDITY NBPE’s portfolio has continued to generate strong liquidity in 2016 $ in millions $120 $109 $112 $100 $21 $26 $82 $83 $80 $5 $63 $67 $62 $15 $60 $52 $12 $50 $44 $24 $72 $48 $37 $73 $33 $42 $66 $40 $20 $19 $54 $24 $16 $25 $53 $28 $20 $36 $31 $16 $20 $14 $16 $
Slide 9: Performance Overview
PERFORMANCE OVERVIEW Year to date, last twelve months, three year, and five year investment performance summary Investment Type 30 Sept 2016 IRR: Year to IRR: LTM IRR: Three IRR: Five Fair Value Date 9/30/16 Year Year ($M) Direct Equity Investments 385.8 11.1% 10.7% 21.5% 18.9% Income Investments 20
Slide 10: Direct Equity Investments
DIRECT EQUITY INVESTMENTS |
Slide 11: Direct Equity Investment Strategy
DIRECT EQUITY INVESTMENT STRATEGY Build and maintain a portfolio of direct private equity investments alongside leading private equity firms • High quality businesses • Reasonable investment valuations • Co-investing alongside Managers in their core areas of expertise • Bias towards investments with
Slide 12: NBPE Equity Investment Portfolio
NBPE EQUITY INVESTMENT PORTFOLIO NBPE has a well diversified direct equity portfolio, giving access to growing companies alongside high quality private equity sponsors NBPE DIRECT EQUITY INVESTMENTS 10.6x EV / EBITDA VALUATION Valuations MULTIPLE1 vs. 21.4x RUSSELL 20002 77 DIRECT EQUITY INVESTMENTS
Slide 13: Largest Equity Investments
LARGEST EQUITY INVESTMENTS Ten largest equity investments Investment Vintage Industry Fair Value ($M) % of NAV 1 (Nasdaq:XOG) 2014 Energy 31.5 4.4% 2 (NYSE:PTHN) 2014 Healthcare 19.4 2.7% 3 2014 Financial Services 14.3 2.0% 4 (Nasdaq:BKFS) 2013 Financial Services 14.0 1.9% 5 2015 Technology 12.2 1.7
Slide 14: Case Study: Extraction (NASDAQ: XOG)
CASE STUDY: EXTRACTION (NASDAQ: XOG) KEY STATISTICS SPONSOR OVERVIEW • Yorktown Partners was founded in 1983 to invest exclusively in the energy sector Transaction type Mid-life Buyout with a focus on exploration and production, transportation, infrastructure, Investment date July 2014 marketing, oi
Slide 15: Case Study: StandardAero (Unrealised)
CASE STUDY: STANDARD AERO (UNREALISED) KEY STATISTICS SPONSOR OVERVIEW • Veritas Capital is a leading private equity firm that invests in companies that Transaction type Buyout deliver a critical product or service, primarily technology or tech-enabled Investment date July 2015 solutions, to governm
Slide 16: Private Equity Buyout Multiples
PRIVATE EQUITY BUYOUT MULTIPLES NBPE’s portfolio is held at 10.6x EV / EBITDA. U.S. public markets were valued at 21.4x and new private market transactions occurred at an average of 10.9x, as of 30 September 2016 PUBLIC AND PRIVATE MARKET VS. NBPE VALUATIONS 22x 21.4x 20x 18x NBPE Valuation(1): 15.9
Slide 17: Direct Equity Performance
DIRECT EQUITY PERFORMANCE NBPE direct equity performance by year of original investment Year of Investment % of Direct IRR: Year to IRR: LTM IRR: Three Year IRR: Five Equity Fair Value Date 9/30/16 Year (30 Sept 2016) 2015-2016 35% 0.1% 9.3% NA NA 2012-2014 56% 18.7% 15.1% 25.0% NA 2009-2011 6% 14.3
Slide 18: Equity Realisations and IPOs in 2016
EQUITY REALISATIONS AND IPOS IN 2016 The below realisations and IPOs represent $14.9 million of fair value and a 2.2x multiple of invested capital Investment Description Outcome 1 • Oil and gas exploration and production in Colorado • IPO – the company went public in • The first oil producer to laun
Slide 19: Valuation Uplift
VALUATION UPLIFT NBPE has seen strong exits and valuation uplift relative to carrying values Valuation Uplift On Exit1 (all Exits) % Uplift 25% 22.4% 20% 15.5% 15% 11.1% 10% 5% 0% Three Quarters Prior Two Quarters Prior One Quarter Prior _______________________ 1. As of 31 October 2016. Analysis inc
Slide 20: Income Investments
INCOME INVESTMENTS |
Slide 21: Income Investment Strategy
INCOME INVESTMENT STRATEGY Since inception, robust deal flow and selectivity have led to strong and stable performance • Invest in the junior debt of private equity backed businesses • Use the knowledge and relationships of the NB Private Equity platform for sourcing and due diligence • Invest on a
Slide 22: NBPE Direct Income Investments
NBPE DIRECT INCOME INVESTMENTS The NBPE income portfolio is well diversified, performing well and has a reasonable average level of total leverage in the capital structure NBPE INCOME INVESTMENTS Strong Cash 9.6% CASH YIELD & Yield1 10.7% EST. YIELD TO MATURITY 41 INCOME INVESTMENTS TOTALING Positio
Slide 23: Income Portfolio Characteristics
INCOME PORTFOLIO CHARACTERISTICS The income portfolio offers attractive risk / return characteristics in strong private equity back companies in securities senior to equity 93% of income investments are in asset light companies 70% of income investments are in a market leading position 1 67% o
Slide 24: Largest Income Investments
LARGEST INCOME INVESTMENTS Ten largest income investments Investment Industry Cash Yield Variable Rate Fair Value ($M) % of NAV 1 Technology 9.1% Yes $19.9 2.7% 2 Industrials 9.8% Yes 18.1 2.4% 3 Consumer Company (Credit Ops) Consumer 10.3% Yes 14.4 1.9% 4 Consumer NA Yes 13.0 1.7% 5 Business Servic
Slide 25: K&N Engineering
K&N ENGINEERING KEY STATISTICS SPONSOR OVERVIEW • Gryphon Investors is a private equity firm with over $2 billion in capital focused Platform Investment Second Lien on U.S. middle market investment opportunities Debt Terms L + 8.625% cash, 1.00% Floor • Since its founding in 1995, Gryphon has partne
Slide 26: MediMedia USA (Realised)
MEDIMEDIA USA (REALISED) COMPANY OVERVIEW INVESTMENT THESIS • MediMedia is a provider of healthcare information solutions to hospitals, payors, • Large established installed base with the majority of revenue contracted for employers and other healthcare decision makers approximately three years • Th
Slide 27: Income Investment Realisations
INCOME INVESTMENT REALISATIONS Strong realisation activity from income investment portfolio $ in millions Returns of Realised Investments $400.0 $356.8 over Last Twelve Months: $350.0 11% IRR $300.0 1.2x gross multiple $250.0 $200.0 Returns of Realised Investments $150.0 Since Inception: $106.7 $100
Slide 28: Fund Investments
FUND INVESTMENTS |
Slide 29: Fund Investment Portfolio Liquidity
FUND INVESTMENT PORTFOLIO LIQUIDITY NBPE’s fund portfolio has continued to produce strong liquidity while becoming an increasingly immaterial component of the overall portfolio $ millions Percentage of Portfolio $160 $148 80% $112 $115 $120 60% $90 $80 40% $55 $43 $35 $40 20% $21 $16 $7 $11 $1 $0 0%
Slide 30: Capital Position, Returns & Performance
CAPITAL POSITION, RETURNS & PERFORMANCE
Slide 31: Capital Position
CAPITAL POSITION Strong capital position and low adjusted unfunded commitments NBPE CAPITAL POSITION AS OF 30 SEPTEMBER 2016 CASH + CREDIT FACILITY $205.2M AVAILABLE FOR BORROWING LESS: UNFUNDED COMMITMENTS ($45.0M) ADJUSTED BASIS EXCESS CAPITAL RESOURCES $160.2M ADJUSTED BASIS COMMITMENT COVERAGE 3
Slide 32: NBPE Financing Initiatives
NBPE FINANCING INITIATIVES In June 2016, NBPE refinanced its credit facility. The 2022 ZDP offers a complementary, efficient cost of financing for NBPE Key Terms 2022 ZDP: Maturity September 30, 2022 Issue Size £50m Term 6.0 years Gross Redemption Yield 4.00% at Issuance Minimum Cover Ratio 2.75x Cr
Slide 33: Historic Performance
HISTORIC PERFORMANCE CUMULATIVE RETURNS OVER TIME1 YEAR TO ONE THREE FIVE SINCE AS OF 30 SEPTEMBER 2016 DATE YEAR YEAR YEAR INCEPTION NET ASSET VALUE2 TOTAL RETURN 6.4% 6.3% 33.0% 60.5% 69.2% SHARE PRICE TOTAL RETURN 11.0% 6.0% 41.7% 89.6% 33.9% _______________________ Note: NAV data as of 30 Septem
Slide 34: NBPE NAV Growth
NBPE NAV GROWTH Total return NAV increase of 60.5% over the past five years NAV per Share $18 $16 $14 $12 $10 $8 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 NAV per Share NAV Per Share (Including Dividends) _______________________ Note: as of 30 September 2016. 34
Slide 35: Dividends
DIVIDENDS Dividend is 76% covered by the cash yield from the income portfolio INCOME INVESTMENTS: $ per Share $209M of value / 9.6% cash yield $0.55 $0.50 $0.50 76% Dividend Coverage $0.45 ANNUALISED YIELD: $0.40 $0.38 4.5% on share price 3.4% on NAV $0.35 RUN RATE CASH ANNUALISED INCOME DIVIDEND __
Slide 36: NBPE – Efficient Private Equity
NBPE – EFFICIENT PRIVATE EQUITY We believe NBPE offers access to a diverse private equity portfolio at a lower cost than many other listed private equity vehicles Listed • Charge double layer of fees Often 1.5% - 2.0% management fee on committed capital and 20% carry at the underlying Fund of Fund
Slide 37: Attractive Value Proposition
ATTRACTIVE VALUE PROPOSITION We believe NBPE offers a compelling investment opportunity Capital appreciation and growth from equity investments Income through an attractive dividend, supported by the cash yield from the income portfolio Strong capital structure and commitment coverage Private
Slide 38: Appendix
APPENDIX |
Slide 39: Trading Information
TRADING INFORMATION Trading Symbol: Class A Ordinary Shares: NBPE Trading Symbol: 2017 ZDPs / 2022 ZDPs: NBPZ / NBPP Exchanges: Exchanges: London Stock Exchange & The Channel Euronext Amsterdam & London Stock Exchange Islands Securities Exchange Authority Limited Base Currency: USD Base Currency: GB
Slide 40: Contact Information
CONTACT INFORMATION Registered Office: NB Private Equity Partners Limited Corporate Brokers: Stifel Nicolaus P.O. Box 225 Neil Winward Heritage Hall, Le Marchant Street Tel: +44.20.7710.7600 St. Peter Port, Guernsey GY1 4HY Channel Islands Jefferies International Limited Tel: +44.(0).1481.716.000 Ga
Slide 41: Endnotes
ENDNOTES 1. The diversification analysis by asset class and investment type is based on the fair value of underlying fund investments and direct/co-investments. Determinations regarding asset class and investment type represent the Investment Manager’s estimates. Accordingly, the actual diversificat
Slide 42: Legal Disclaimer
LEGAL DISCLAIMER THE CONTENTS OF THIS DOCUMENT AND THE PRESENTATION ARE STRICTLY CONFIDENTIAL AND MAY NOT BE COPIED, DISTRIBUTED, PUBLISHED OR REPRODUCED IN WHOLE OR IN PART, OR DISCLOSED OR DISTRIBUTED BY RECIPIENTS TO ANY OTHER PERSON. ANY RECIPIENT OF THIS DOCUMENT AGREES TO KEEP PERMANENTLY CONF
Slide 43: Legal Disclaimer - Continued
LEGAL DISCLAIMER - CONTINUED THE PROMOTION OF NBPE AND THE DISTRIBUTION OF THIS DOCUMENT AND THE PRESENTATION IN THE UNITED KINGDOM IS RESTRICTED BY LAW. ACCORDINGLY, THIS COMMUNICATION IS DIRECTED ONLY AT (I) PERSONS OUTSIDE THE UNITED KINGDOM TO WHOM IT IS LAWFUL TO COMMUNICATE TO, OR (II) PERSONS
Slide 44: Legal Disclaimer - Continued
LEGAL DISCLAIMER - CONTINUED BY ACCEPTING AND READING THIS DOCUMENT AND/OR ATTENDING THE PRESENTATION TO WHICH THIS DOCUMENT RELATES YOU WILL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND UNDERTAKEN FOR THE BENEFIT OF NBPE, THE INVESTMENT MANAGER, NEUBERGER BERMAN AND OTHERS THAT (A) YOU ARE OUTSIDE
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