Neuberger Private Equity Partners Limited USD · LSE:NBPE
Neuberger Private Equity Partners Limited USD — NB Private Equity Partners — Investor Day (October 2019)
65 slides from Neuberger Private Equity Partners Limited USD's investor day presentation, Oct 1, 2019
Slide 1: NB Private Equity Partners 2019 Capital Markets Day
NB Private Equity Partners 2019 Capital Markets Day 1 October 2019
Slide 2: Introduction & Welcome
Introduction & Welcome William Maltby Chairman NB Private Equity Partners
Slide 3: NBPE Overview
NBPE Overview Focus on direct equity investments alongside leading private equity sponsors Sourced and executed through Neuberger Berman’s $74 billion private equity business No second layer of management fees or carried interest on vast majority of direct investments1 Ability to control investment
Slide 4: Agenda
Agenda − Private Equity Market Update − Neuberger Berman Overview & Capabilities − NBPE Portfolio and Strategy − Detailed Portfolio Analysis − Investment Themes − GP Presentations − Concluding Remarks NB PRIVATE EQUITY PARTNERS CAPITAL MARKETS DAY 4
Slide 5: Speakers
Speakers Peter von Lehe Paul Daggett Joana Rocha Managing Director, Managing Director, Scaff Head of Investment Private Equity Managing Director, Solutions & Strategy; Head of Europe NBPE Director Private Equity NB PRIVATE EQUITY PARTNERS CAPITAL MARKETS DAY 5
Slide 6: Independent Directors of NB Private Equity Partners Limited
Independent Directors of NB Private Equity Partners Limited William Wilken von Hodenberg Maltby Senior Independent Chairman Director Trudi Clark John Falla Management Audit Engagement & Committee Nomination Chairman Committee Chairman NB PRIVATE EQUITY PARTNERS CAPITAL MARKETS DAY 6
Slide 7: Private Equity Market Update
Private Equity Market Update Peter von Lehe Managing Director, Head of Investment Solutions & Strategy; NBPE Director
Slide 8: Long-Term Outperformance of Global Private Equity vs. Public Markets
Long-Term Outperformance of Global Private Equity vs. Public Markets Private equity has generated strong, consistent returns over the long term 20 Year 15 Year 10 Year 23.9% 22.4% 20.1% 15.6% 12.2% 13.8% 11.3% 5.3% 7.6% MSCI Global PE Global PE MSCI Global PE Global PE MSCI Global PE Global PE World
Slide 9: Private Equity Return Trends
Private Equity Return Trends First quartile and median private equity has generated strong returns across vintage years, including vintages that lived through the GFC Global Buyout Fund Net IRR by Vintage 23% 22% 22% 21% 21% 21% 18% 18% 17% 14% 15% 16% 15% 16% 14% 15% 14% 11% 11% 11% 9% 9% 11% 8% 9%
Slide 10: Steady Decline in the Number of Public Companies
Steady Decline in the Number of Public Companies U.S. Listed Companies vs. Private Equity-owned Companies 10,000 9,473 8,000 6,917 6,000 4,000 4,397 2,000 1,768 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Listed Companies Private Equity-Owned
Slide 11: Private Equity: $2 Trillion in Net Assets
Private Equity: $2 Trillion in Net Assets % of PE NAV of Global Stock Market Value ($ in Trillions) $80 $74 $60 $60 $40 0.3% 1.5% 2.7% $20 $9 $0.03 $0.9 $2.0 $0 1990 2007 December 2018 PE Net Asset Value % of PE NAV of Global Stock Market Value Source: ThomsonOne, World Federation of Exchanges & Wor
Slide 12: Private Equity Allocations by Investor Type
Private Equity Allocations by Investor Type Average Target Allocation to Private Equity by Investor Type 40% 35% 30% Average Target Allocation as a Percentage of AUM 25% 20% 2019 Mean, 12.0% 15% 10% 2013 Mean, 10.7% 5% 0% Family Office Sovereign Endowment Foundation Public Pension Private Sector Sup
Slide 13: Deal Volume
Deal Volume Global Private Equity Invested Capital $1,200 $1,043 $1,000 $727 $791 $800 $744 $790 $683 $638 $629 $600 ($ in billions) $453 $489 $381 $391 $398 $400 $316 $232 $228 $200 $114 $168 $163 $81 $104 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 14: U.S. & European Public and Private Valuation Multiples
U.S. & European Public and Private Valuation Multiples U.S. & European Public and Private Valuation Multiples 14x 14x U.S. Private 12.6x 12.2x 12.3x Europe Private 5 Year Avg: 10.2x 5 Year Avg: 10.0x 12x 10.5x 11.1x 11.2x 12x 10.3x 10.9x 10.6x 10.6x 10.6x 10.5x 9.7x 10.0x 10.3x 10.0x 10.0x 10.0x 10x
Slide 15: U.S. and European Leverage Levels
U.S. and European Leverage Levels U.S. and European Leverage Multiples 7x 6.2x 6.1x 6.0x 5.8x 6x 5.7x 5.6x 5.5x 5.7x 5.7x 5.6x 5.2x 5.1x 5.3x 5.3x 4.8x 4.9x 5.1x 5.0x 5.0x 5x 4.6x 4.7x Debt/EBITDA Multiple 4.5x 4.6x 4.4x 4.0x 4x 3.7x 3x 2x 1x 0x 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 16: Debt Terms
Debt Terms Interest coverage ratios remain healthy and covenants are increasingly “lite” Interest Coverage Ratios Percentage of Covenant-Lite Loans 3.5x 100% 79% (EBITDA – CAPEX) / Interest % of All Institutional Loans 3.0x 80% 2.5x 60% 2.0x 40% 1.5x 20% 1.0x 0% '06 '07 '08 '09 '10 '11 '12 '13 '14 '
Slide 17: Neuberger Berman Overview & Capabilities
Neuberger Berman Overview & Capabilities Joana Rocha Scaff Managing Director, Head of Europe Private Equity
Slide 18: Neuberger Berman
Neuberger Berman $333bn1 of Assets Under Management EQUITY FIXED INCOME ALTERNATIVES $101bn $151bn $90bn AUM and Committed Capital HISTORY OWNERSHIP DEPTH STABILITY 80 100% ~2,000 98% Years Investing Independent, Employees across Retention Rate2 Employee-Owned 31 Cities Globally ESG Integration Acro
Slide 19: Neuberger Berman Private Equity Platform
Neuberger Berman Private Equity Platform Co-investment • Over 30+ Years of Industry Experience $16bn1 • Over $74 Billion of Commitments Managed Secondary Funds Primary $10bn1 • Committed ~$10 billion annually to private equity Funds over the past 3 years Private Credit $22bn1 $4bn • Leverages the Re
Slide 20: One of the World's Largest Direct Private Equity Managers
One of the World’s Largest Direct Private Equity Managers Private Equity International – 2019 Ranking 2019 Rank Firm Headquarters 1 Blackstone New York 2 The Carlyle Group Washington, DC 3 KKR New York 4 CVC Capital Partners London 5 Warburg Pincus New York 6 Bain Capital Boston 7 EQT Stockholm 8 Th
Slide 21: Neuberger Berman Private Equity Team
Neuberger Berman Private Equity Team ~70 Senior / ~130 total Private Equity Investment Professionals. Supported by Legal, Deep Business Development and Client Solutions Global Investment Professionals based in North America, Europe, Asia and Latin America Experienced 20+ years of average experience
Slide 22: Private Investment Portfolios & Co-Investments Team
Private Investment Portfolios & Co-Investments Team Investment Committee1 John Buser Kent Chen Michael Kramer John Massey David Morse Joana Rocha Scaff Executive Vice Chairman Head of Asia PE Managing Director Chairman Co-Head of Co investments Head of Europe PE 37 Years of Experience 26 Years of Ex
Slide 23: Neuberger Berman Co-investment Platform
Neuberger Berman Co-investment Platform Leverages the Neuberger Berman Private Equity Platform Seeks co-investments sourced Across the NB Platform, invest from high-quality private equity Across the NB Platform, Reviewed between <$10m - $400m in each managers over 1,900 Co-Investment company across
Slide 24: NBPE Benefits from Neuberger Berman's Strong Deal Flow
NBPE Benefits from Neuberger Berman’s Strong Deal Flow • Limited Partner in 530+ funds Co-investment Opportunities originated2 400 367 • 160+ Advisory Board seats 362 300 Run-rate 229 Deal • $13+ billion raised for predominantly 188 199 Flow primary fund investing in the last five 200 years1 176 100
Slide 25: Types Of Co-Investments
Types Of Co-Investments Traditional / Syndication: Sponsor approaches co-investors typically after a new deal is signed or already closed to offer a co-investment opportunity Co-Underwrite / Non-Syndicated: Partner with the lead sponsor earlier in the transaction, typically before a purchase agreeme
Slide 26: NBPE Invests Alongside Leading GPs
NBPE Invests Alongside Leading GPs As of June 2019. Includes one undisclosed sponsor due to confidentiality provisions. Represents private equity sponsors of investments made over the last two years. NB PRIVATE EQUITY PARTNERS CAPITAL MARKETS DAY 26
Slide 27: NBPE Portfolio and Strategy
NBPE Portfolio and Strategy Paul Daggett Peter von Lehe Managing Director, Managing Director, Neuberger Berman Head of Investment Solutions & Strategy; NBPE Director
Slide 28: NBPE Position in the Listed Private Equity Landscape
NBPE Position in the Listed Private Equity Landscape NBPE is focused on direct investments, invested alongside over 55 private equity sponsors Hyper Fund of Funds Diversified • Primary & Secondary, some co-investment exposure NB Private Equity Partners • Dual fee layer • Need to over-commit or • Mul
Slide 29: NBPE Portfolio Performance Over Time
NBPE Portfolio Performance Over Time Gross IRR Performance 31 Aug 2019 One Year Three Year Five Year Ten Year ($ in millions) Fair Value Direct Equity Investments $909.8 11.9% 18.6% 18.2% 17.6% Income Investments 109.0 2.5% 7.9% 6.0% 11.3% Legacy Funds 40.6 (1.0%) 5.7% 2.4% 10.9% Total Portfolio $1,
Slide 30: Balance Sheet
Balance Sheet 31 August 2019 31 Dec 2018 $ in millions (Unaudited) (Audited) Equity Investments $909.8 $831.1 Income Investments 109.0 135.1 Legacy Funds 40.6 53.7 Total Investments $1,059.4 $1,019.9 Cash 4.8 23.0 Credit Facility Drawn (60.0) (40.0) ZDPs (132.6) (134.9) Other 3.8 4.2 Net Asset Value
Slide 31: Portfolio Investment Activity & Liquidity
Portfolio Investment Activity & Liquidity $960 million of realisations received and over $775 million of new investments since the beginning of 2016 Realisations Investment Cash Flows $ in millions $ in millions $350 $332 $350 $313 $300 $300 $253 $78 $250 $231 $250 $220 $225 $69 $200 $61 $200 $33 $1
Slide 32: Portfolio Diversification by Fair Value – Geography
Portfolio Diversification by Fair Value – Geography Geography • Portfolio currently weighted to North America North America 78% •Europe has increased from 8% to Europe 18% over the past three years 18% •Asia / ROW has been steady at 4-5% Asia / RoW 4% Note: As of 31 August 2019. NB PRIVATE EQUITY PA
Slide 33: Portfolio Diversification by Fair Value – Industry
Portfolio Diversification by Fair Value – Industry Industry Financial Services • Highest exposures to TMT; Business 8% Services Industrials, Healthcare and Consumer 10% Healthcare • TMT similar to past three years. 17% Industrials Industrials, Healthcare and Consumer 16% Consumer have increased 16%
Slide 34: Portfolio Diversification by Fair Value – Vintage Year
Portfolio Diversification by Fair Value – Vintage Year Vintage Year 2017 • Maturing portfolio diversified by year 32% of investment Weighted average age of direct 2016 2018 equity investments of 2.7 years 20% 17% • Limited exposure to older vintages 2015 2019 • Significant realisations from earlie
Slide 35: Portfolio Diversification by Fair Value – Investment Size
Portfolio Diversification by Fair Value – Investment Size NBPE Position Size • 121 companies in portfolio $10 - $19.9 million However 47 positions are <$5 32% / 22 million 14 companies are public (incl. 5 >$20 million 29% / 11 investments <$5m in value) $5 - $9.9 million 29% / 41 $0 - $1.9 milli
Slide 36: Largest Investments
Largest 15 Investments Investment Inv. Date Industry Thesis Fair Value ($m) % of Value 2017 Industrials Secular growth, M&A $37.4 3.5% 2017 Industrials M&A, operational efficiencies 35.5 3.4% 2016 TMT Secular growth, M&A 32.0 3.0% 2017 Financial Services Defensive sector, M&A 28.0 2.6% 2014 Consumer
Slide 37: Public Stock Exposure
Public Stock Exposure 6% of total fair value in public stocks 31/12/18 2019 2019 % Change 31/8/19 Investment IPO Date Fair Value Sales In Share Price Fair Value Solarwinds (NYSE: SWI) Oct 2018 $10.1 - 23.1% 12.4 Gardner Denver (NYSE: GDI) May 2017 6.1 - 40.2% 8.5 Brightview (NYSE: BV) June 2018 4.5
Slide 38: 2019 YTD Liquidity Events
2019 YTD Liquidity Events Investment 2019 $ Investment Description 2019 Event Date Realised 2014 Japanese mortgage company Sale of public position $7m 2014 Packaging materials supplier Sale to financial buyer $7m 2017 European parking service provider Dividends $6m 2014 Underwriter of extended warra
Slide 39: NBPE Direct Equity Investments – Exit Results
NBPE Direct Equity Investments – Exit Results 2.6x average realised gross multiple on direct equity exits since 2016 Gross Multiple of Invested Capital On Exits1 6.0x Weighted Avg. Average Multiple: 5.0x 4.4x 2.6x 4.0x 3.0x 1.9x 2.4x 2.1x 2.0x 1.0x 0.0x 2016 2017 2018 2019 Multiple of Invested Capit
Slide 40: NBPE Direct Equity Investments – Uplift at Exit
NBPE Direct Equity Investments – Uplift at Exit Strong average uplift at exit Valuation Uplift on Exit1 (All Exits) % Uplift 50% 40% 30.3% 30% 22.2% 20% 13.0% 10% 0% Three Quarters Prior Two Quarters Prior One Quarter Prior % Uplift on Realisation _______________________ 1. As of 31 August 2019. Ana
Slide 41: NBPE Direct Equity Investments – Holding Periods
NBPE Direct Equity Investments – Holding Periods 67% of value created from exits which had less than a 5 year holding period Holding Periods $ in millions Multiple $350 3.5x Blended multiple $300 3.0x of 2.8x $250 2.5x $200 2.0x $150 1.5x $100 1.0x $50 0.5x $0 0.0x < 3 Years 3 - 4.9 Years 5 - 6.9 Ye
Slide 42: NBPE Direct Equity Investments – Liquidity Analysis
NBPE Direct Equity Investments – Liquidity Analysis Over the last five years the weighted average age of the investments in NBPE has typically been between two and three years Weighted Average Age Avg Age (Yrs) 4.0 3.0 2.7 2.8 2.4 2.7 3.0 2.3 2.1 2.2 2.2 1.9 2.0 1.0 0.0 Dec-14 Jun-15 Dec-15 Jun-16 D
Slide 43: Investment Themes
Investment Themes
Slide 44: Private Markets and the Investment Landscape
Private Markets and the Investment Landscape Private Markets Relative Strengths Better Information Current Vulnerabilities Control Entry & Exit Timing Late Cycle Strategic & Operational Control High Valuation Long-Term Alignment High Leverage Diversification Muted Volatility NB PRIVATE EQUITY PARTNE
Slide 45: Creating Value Through Active Ownership
Creating Value Through Active Ownership Operational Enhancement: drive value by focusing on operational 1 efficiency Drive Growth: expansion into new geographies, additional product 2 lines 3 Buy & Build / Consolidation: platform investment with bolt-on acquisitions; often in highly fragmented marke
Slide 46: Industry Focus: Technology, Media, Telecom
Industry Focus: Technology, Media, Telecom $ Fair Value / Secular Defensive Add-on Operational Company % of Value Growth Characteristics Acquisitions Efficiency $32.0 / 3.0% 20.2 / 1.9% 17.9 / 1.7% 16.7 / 1.6% Tech, Media, 16.4 / 1.5% Telecom Top Five 28% Co’s $103.2 / 9.7%
Slide 47: Industry Focus: Healthcare
Industry Focus: Healthcare $ Fair Value / Secular Defensive Add-on Operational Company % of Value Growth Characteristics Acquisitions Efficiency Healthcare 17% $24.0 / 2.3% 22.6 / 2.1% 17.9 / 1.7% 16.7 / 1.6% 15.9 / 1.5% Top Five Co’s $97.1 / 9.2% NBPE’s healthcare portfolio
Slide 48: Industry Focus: Industrials
Industry Focus: Industrials $ Fair Value / Secular Defensive Add-on Operational Company % of Value Growth Characteristics Acquisitions Efficiency $37.4 / 3.5% 35.5 / 3.4% Industrials 16% 21.9 / 2.1% 18.5 / 1.7% 8.7 / 0.8% Top Five Co’s $98.4 / 11.5% NBPE’s industrial investments ar
Slide 49: Industry Focus: Consumer
Industry Focus: Consumer $ Fair Value / Secular Defensive Add-on Operational Company % of Value Growth Characteristics Acquisitions Efficiency Consumer 16% $27.8 / 2.6% 12.8 / 1.2% 11.8 / 1.1% Branded Toy 10.6 / 1.0% Company* 9.8 / 0.9% Top Five Co’s $72.8 / 6.8% NBPE’s consumer portfo
Slide 50: Industry Focus: Business Services
Industry Focus: Business Services $ Fair Value / Secular Defensive Add-on Operational Company % of NAV Growth Characteristics Acquisitions Efficiency Business Business Services Services 27.6 / 2.6% 10% Company* 27.4 / 2.6% 17.4 / 1.6% 8.0 / 0.8% 7.7 / 0.7% Top Five Co’s $88.2 /
Slide 51: Concluding Remarks
Concluding Remarks William Maltby Chairman, NB Private Equity Partners
Slide 52: Summary of Recent Corporate Governance Initiatives
Summary of Recent Corporate Governance Initiatives Board Appointments. Appointment of William Maltby as Chairman and Wilken Von Hodenberg as Senior Independent Director Dividends. Increased dividend by $0.02 (annually), consistent with the long-term dividend policy of an annual 3.0% of NAV dividend
Slide 53: Shareholder Base
Shareholder Base June 2013 June 2019 Undisclosed Undisclosed 15% 13% Individuals Individuals 10% U.K. 3% Domestic / Wealth Non-U.K. Managers Institutions U.K. 30% 15% Domestic / Non U.K. Wealth Institutions Managers 52% 66% Note: as of 30 June 2019. NB PRIVATE EQUITY PARTNERS CAPITAL MARKETS DAY 53
Slide 54: Capital Returned to Shareholders Over Time
Capital Returned to Shareholders Over Time NBPE has returned more than $215 million to shareholders Cumulative Capital Returns $250 $200 ($ in millions) $150 $100 $50 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Dividends Share Buybacks Note: as of 30 September 2019. NB PRIVATE EQU
Slide 55: New NBPE Website: Coming Soon
New NBPE Website: Coming Soon NB PRIVATE EQUITY PARTNERS CAPITAL MARKETS DAY 55
Slide 56: NAV Performance
NAV Performance NAV Total Return (USD / GBP)1 % Total Return 300% 250% 200% 150% 100% 50% 0% Year to Date One Year Three Year Five Year Ten Year USD Total Return GBP Total Return USD 7.4% 7.8% 40.6% 60.4% 174.8% GBP 12.3% 14.9% 51.4% 118.2% 267.9% Note: Based on NBPE NAV data as of 31 August 2019. 1
Slide 57: Share Price Performance
Share Price Performance Share Price Total Return (USD / GBP)1 % Total Return 500% 400% 300% 200% 100% 0% -100% Year to Date One Year Three Year Five Year Ten Year USD Total Return GBP Total Return USD 11.3% (5.0%) 46.0% 50.6% 293.9% GBP 16.4% 1.3% 57.2% 104.9% 427.2% Note: NAV data as of 31 August 2
Slide 58: NBPE Value Proposition
NBPE Value Proposition NBPE trades at approximately a 25% discount NBPE Equity Portfolio Stats 6.1% 8.3% 30% LTM Revenue Growth LTM EBITDA Growth Average uplift since 20161 NBPE Returns & Dividend Yield 9.9% 18.2% 4.1% Five Year NAV Annualised Five Year Equity Gross IRR Annualised dividend yield Tot
Slide 59: Appendices
Appendices
Slide 60: Non-Executive Director Biographies
Non-Executive Director Biographies William Maltby was vice chairman of Investment Banking at Deutsche Bank where he worked for more than 25 years. He spent a further six years as a Senior Adviser to the Investment Banking Division of Deutsche Bank. He was a corporate financier specialising in financ
Slide 61: NB Biographies
NB Biographies Peter von Lehe is the Head of Investment Solutions and Strategy and is a Managing Director of Neuberger Berman. He is also a member of the Athyrium, Co-Investment, Private Investment Portfolios, Marquee Brands and Renaissance Investment Committees. Mr. von Lehe sits on the Limited Par
Slide 62: Disclaimers
Disclaimers
Slide 63: Legal Disclaimer
Legal Disclaimer 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 OF THE UNITE
Slide 64: Legal Disclaimer
Legal Disclaimer THIS DOCUMENT, ANY PRESENTATION MADE IN CONJUNCTION WITH THIS DOCUMENT AND ANY ACCOMPANYING MATERIALS (THE "INVESTOR MATERIALS") ARE STRICTLY CONFIDENTIAL AND MAY NOT BE COPIED, DISTRIBUTED, PUBLISHED OR REPRODUCED IN WHOLE OR IN PART, OR DISCLOSED OR DISTRIBUTED BY RECIPIENTS TO AN
Slide 65: Legal Disclaimer
Legal Disclaimer THE PROMOTION OF NBPE AND THE DISTRIBUTION OF THE INVESTOR MATERIALS 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 HAVING PROFESSIONAL EXP
NB Private Equity Partners — Investor Day (October 2019) on 6ix