Neuberger Private Equity Partners Limited USD · LSE:NBPE
Neuberger Private Equity Partners Limited USD — NB Private Equity Partners — Winterflood Conference 2014
34 slides from Neuberger Private Equity Partners Limited USD's conference presentation, Jan 23, 2014
Slide 1: NB Private Equity Partners Winterflood Conference
NB Private Equity Partners Winterflood Conference 23 January 2014 Financial Information as of 31 December 2013, unless otherwise noted
Slide 2: NB Private Equity Partners Overview
NB Private Equity Partners Overview NBPE is a closed end investment company which provides diversified exposure to the private equity asset class and the opportunity for capital gains as well as current income NBPE provides investors with diversified exposure to the private equity NBPE asset class i
Slide 3: Integrated Private Equity Platform
Integrated Private Equity Platform NBPE leverages the integrated private equity platform which provides superior deal flow and enhanced due diligence insights NEUBERGER BERMAN Approximately $242 billion in assets under management1 Global Presence: Approximately 2,000 Alternatives employees in 29 Equ
Slide 4: Why Private Equity?
Why Private Equity? Private equity includes equity and debt investments in private equity owned companies either through a fund structure or directly • Ability to buy private companies at valuations typically below those of Equity public companies • Private equity firms typically exercise significan
Slide 5: NBPE Portfolio Overview
NBPE Portfolio Overview The majority of NBPE’s portfolio is invested in direct investments funded through a mature, cash generative fund portfolio Equity Co- • Equity investments alongside sponsors in private equity investments investments • $156 million of fair value (25% of NAV) in 44 investments
Slide 6: Portfolio by Industry and Geography
Portfolio by Industry and Geography The NBPE portfolio has a tactical over-allocation to investments in North America and is well diversified by industry sector Geography by Fair Value Industry by Fair Value Rest of Business World Services Comm. / Div. / Other 5% 9% Media Europe Trans. 12% 2% 6% 13%
Slide 7: Relative Value: Public vs. Private Markets
Relative Value: Public vs. Private Markets Private equity firms typically buy companies at lower multiples than the public markets Enterprise Value / EBITDA 14.0x 12.8x 11.9x 12.0x 10.8x 10.2x 10.6x 9.7x 10.1x 10.0x 9.1x 8.7x 8.8x 8.7x 8.5x 8.5x 8.0x 7.7x 6.0x 4.0x 2.0x 0.0x 2007 2008 2009 2010 2011
Slide 8: Equity Co-investment Portfolio
Equity Co-investment Portfolio NBPE’s equity co-investment portfolio contains approximately $156 million of fair value and is diversified across sponsor, industry and vintage year Portfolio • $156 million of fair value invested in 44 equity co-investments alongside over 30 sponsors, representing 25%
Slide 9: Equity Co-investment Case Study
Equity Co-investment Case Study Equity co-investment alongside the Carlyle Group in RAC, the second largest provided of breakdown assistance services in the U.K. • RAC is the second largest provider of breakdown assistance in the U.K. Description • Operates ~1,800 patrols and attends approximately 2
Slide 10: Junior Private Debt Market Dynamics
Junior Private Debt Market Dynamics Barriers to entry in the second lien and mezzanine markets create an attractive illiquidity premium for investors FIXED INCOME YIELDS (HISTORICAL- 5 YEAR MEDIAN) FIXED INCOME YIELDS (CURRENT- DECEMBER 2013) 16% 16% 12% 11-14% 12% 11-14% Illiquidity 10.5% Premium 8
Slide 11: Private Debt Default Rates
Private Debt Default Rates Leveraged loans of private equity backed companies have historically had lower default rates Default Rate 18% 16% Peak (November 2009) Non-private equity backed: 16.3% 14% Private equity backed: 7.5% 12% Average over Period 10% Current (December 2013) Non-private equity ba
Slide 12: Direct Yielding Investment Portfolio
Direct Yielding Investment Portfolio NBPE’s direct yielding portfolio includes mezzanine and second lien debt investments and healthcare credit investments totaling $184 million of fair value • $160 million of fair value Corporate Debt 9.2% cash yield / 10.6% total yield Investments • 76% of debt
Slide 13: Private Debt Investment Case Study: Archroma
Private Debt Investment Case Study: Archroma Direct yielding investment in Archroma, a provider of specialty chemicals, yielding L+825 bps with a 1.25% LIBOR floor • Global provider of specialty chemicals for the textile, paper and Description emulsion industries • Archroma is comprised of three bus
Slide 14: NBPE Fund Investment Portfolio
NBPE Fund Investment Portfolio Approximately $287 million invested in a mature portfolio of high quality private equity funds • Fund portfolio in realization mode • Significant distribution activity in 2013 from fund investments Cash Generative Portfolio $111 million, or 60% of all 2013 distributio
Slide 15: Cash Flow & Investment Activity
NB Private Equity Partners Cash Flow & Investment Activity The portfolio maintained a high velocity of capital in 2013 and benefitted from NBPE’s strategy of including shorter duration opportunities Cash flows during 2013 New Investment Activity Distributions from fund portfolio re- $ in millions $2
Slide 16: Strong Balance Sheet
Strong Balance Sheet NBPE maintains a safe capital structure and has significant capital for new investments NBPE Balance 31 December Sheet Overview 2013 ($ in millions) Fair Value $627 Cash $64 Total Assets $700 ZDP Liability $73 Other Liabilities $12 NAV $614 Available • $64 million of cash Capita
Slide 17: Dividends
Dividends NBPE has a long term policy of paying sustainable dividends. On 21 January 2014, NBPE announced a February dividend of $0.22 / Share • $0.20 per Share paid in February 2013 2013 Dividends • $0.21 per Share paid in August 2013 • February 2014 dividend of $0.22 February 2014 • Ex-dividend da
Slide 18: Historical Share Price vs. NAV per Share Including Dividends
Historical Share Price vs. NAV per Share Including Dividends Since the beginning of 2013, NBPE’s share price increased 31.6%1 and NAV per Share including dividends increased 10.1%. NBPE has offered steady NAV per Share growth since 2009 Price $16 $14 $13.00 Total Return NAV $12 $10.20 $10 $8 $6 19.0
Slide 19: NBPE Returns over Time
NBPE Returns over Time Since inception, NBPE’s NAV return including dividends is 30.0% Total Return NAV Including Share Price Total Return1 Dividends One Year 10.1% 36.9% Three Year 25.2% 52.2% Five Year 58.5% 334.8% Since Inception 30.0% 6.1% (7/18/2007) _______________________ Note: As of 31 Decem
Slide 20: Historical ZDP Price and NAV per ZDP Share
Historical ZDP Price and NAV per ZDP Share NBPE’s ZDP shares have consistently traded at a premium to accreted value since they were issued in late 2009. The GRY is currently 4.3% at the prevailing market price Price 147.25p 160.0p 10.0% premium 150.0p 140.0p 130.0p 133.92p 120.0p 110.0p 100.0p Dec-
Slide 21: Conclusion
Conclusion We believe that NBPE offers a compelling investment opportunity • Potential for capital appreciation through equity co-investments as Differentiated well as current income through dividends supported by direct yielding Portfolio portfolio Discount • Current discount to NAV of approximatel
Slide 22: Trading Information
Trading Information Ordinary Share information ZDP Share information Trading Symbol: NBPE Trading Symbol: NBPZ Exchanges: Euronext Amsterdam & London Exchanges: London Stock Exchange Stock Exchange & Channel Islands Stock Exchange Base Currency: USD Base Currency: GBP Bloomberg: NBPE NA, NBPE LN Blo
Slide 23: Contact Information
Contact Information NB Private Equity Partners Limited Corporate Oriel Securities Registered P.O. Box 225 Brokers: Neil Winward Office: Heritage Hall, Le Marchant Street Tel: +44.20.7710.7600 St. Peter Port, Guernsey GY1 4HY Jefferies International Limited Channel Islands Gary Gould/Stuart Klein Tel
Slide 24: Appendix: Portfolio & Valuation
APPENDIX: PORTFOLIO & VALUATION
Slide 25: NAV Update
NAV Update On a total return basis, including dividends, NBPE’s NAV per share increased 10.1% during 2013 December 2013 NAV Update Total return NAV per Share increase 10.1% YTD 31 DECEMBER 2013 31 DECEMBER 2012 ($ in millions, except per share values) (Unaudited) (Audited) Fund Investments $287.0 $3
Slide 26: Diversified Private Equity Exposure
Diversified Private Equity Exposure The portfolio is well diversified and includes a meaningful and increasing exposure to equity co- investments and direct yielding investments Asset class by fair value 54% of fair value invested in direct investments Growth / Venture Funds 7% Large-cap Buyout Fund
Slide 27: NBPE Equity Co-investment Portfolio
NBPE Equity Co-investment Portfolio Diversified portfolio of equity co-investments $156.1 million of fair value 25% of NAV % of % of Company Name Asset Class Lead Sponsor Company Name Asset Class Lead Sponsor NBPE NAV NBPE NAV Acteon Mid-cap Buyout KKR 0% - 1% Group Ark Insurance Mid-cap Buyout Aqui
Slide 28: Direct Yielding Investment Portfolio
Direct Yielding Investment Portfolio Approximately $184.0 million of direct yielding investments generating a current cash yield of 9.6% $184.0 million of fair value 30% of NAV INVESTMENT 1 CASH + PIK PIK EST. YIELD TO INVESTMENT NAME SECURITY DETAILS FAIR VALUE CASH YIELD DATE COUPON YIELD MATURITY
Slide 29: NBPE Fund Investment Portfolio
NBPE Fund Investment Portfolio Mature fund portfolio with approximately $287.0 million of fair value Vintage Unfunded % of Investment Name Asset Class Fair Value Year Commitment NBPE NAV NB Crossroads Fund XVIII Mid-cap Buyout Mid-cap Buyout Diversified $7.7 $28.4 4.6% NB Crossroads Fund XVII Fund X
Slide 30: NBPE Capital Position
NBPE Capital Position NBPE is in a strong capital position to make new investments CAPITAL POSITION UNFUNDED COMMITMENTS Total capital resources $263.7m Unfunded commitments $219.1m Cash balance $63.7m NB Co-investment Program $94.8m Credit facility available $200.0m NB Healthcare Credit Program $34
Slide 31: 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 32: 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 33: 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 H
Slide 34: Legal Disclaimer (Continued)
Legal Disclaimer Continued BY 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 UNITED STATES AND ARE AN "INVESTMENT P
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