NBPE is a closed end private equity fund which is listed on the London Stock Exchange. It’s value proposition is summarised as:
- Access to a portfolio of direct private equity investments, alongside over 50 distinct private equity firms and sourced through Neuberger Berman’s ~$90 billion private equity business
- Diversified private company exposure without single GP risk
- Strong Historic Performance
- Goal of capital appreciation from equity investments and income through dividend
- No second layer of management fees or carried interest on vast majority of direct investments, offering significant fee efficiency vs listed fund of funds vehicles1
A co-investment is a direct private equity investment in which the co-investor invests into a company alongside a lead private equity fund. These opportunities arise in situations where the lead fund seeks a partner or partners to share the equity check in a transaction. The co-investor has the benefit of full due diligence in order to make its investment decision and if it chooses to invest, operating control of the company remains with the lead fund. In return, the co-investor usually pays no management fee or carried interest to the lead fund, which means co-investments represent a highly fee efficient way to invest in private equity.
Neuberger Berman’s integrated private equity platform has strong co-investment capabilities and experience, providing sourcing, evaluation and execution of these strategic co-investment opportunities for NBPE.
An investment approach focused on co-investments provides NBPE with a number of potential advantages:
- Selectivity. NBPE benefits from a high level of selectivity as a result of the deep dealflow and experienced team that the Neuberger Berman platform provides, sourcing and reviewing hundreds of co-investment opportunities annually and investing in a small minority of these.
- Fee Efficiency. Co-investments are often completed with favourable economic terms and consequently NBPE offers a fee efficient means to access the private equity asset class.
- Appropriate Diversification. NBPE seeks to provide appropriate diversification, while owning individual investments of sizes that can still be meaningful to the fund.
- GP Diversification. NBPE doesn’t depend on a small number of lead general partners for sourcing investments - the portfolio typically provides exposure to investments with over 50 different lead private equity sponsors globally.
- Balance Sheet Management. Because NBPE invests directly, and not through third party funds, there’s a low level of unfunded commitments which means NBPE can efficiently manage its balance sheet.
NBPE is managed by the private equity division of Neuberger Berman which has been an active and successful private equity investor since 1987 and currently manages over $90 billion of investor commitments across multiple strategies. Neuberger Berman Private Equity has been investing as a limited partner for over 30 years, is a limited partner in over 540 active funds, and has committed over $10 billion per annum on average to private equity investments over the last three years. The Investment Manager has developed a strong reputation for its co-investment capabilities in the private equity industry and has become a preferred strategic partner to numerous private equity sponsors, allowing access to a broad flow of investment opportunities.
NB Private Equity conducts thorough due diligence at the company level, with a focus on investment and operational due diligence, as well as Environmental, Social and Governance (“ESG”) factors specific to the target company and industry.
The sourcing and evaluation of the Company’s investments are conducted by the Investment Manager’s team of over 200 private equity professionals who specialise in direct equity investments, income investments and fund investments. The Investment Manager currently maintains offices in New York, London, Boston, Dallas, San Francisco, Hong Kong, Milan, Zurich, Tokyo, Luxembourg and Bogotá.
NBPE seeks to maintain strong commitment coverage ratios and a reasonable amount of total leverage over time. NBPE’s access to a $300 million revolving credit facility provides the flexibility to invest capital in near term opportunities using the credit line which can be paid down over time through portfolio realisations. In addition, NBPE’s two classes of Zero Dividend Preference Shares provide a reasonable level of structural leverage to the Company. Balance sheet management is critical to a closed ended private equity fund, with a trade off between cash drag if too much cash is held vs. increased risk if too little cash is held compared to unfunded commitments. However, NBPE’s direct investment strategy seeks to provide great flexibility – by investing primarily on a deal by deal basis, NBPE has the ability to cease investment activity should the Company need to. This provides significant capital deployment and pacing advantages to NBPE.